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The Employment and Support Allowance 

(Transitional Provisions, Housing Benefit 

and Council Tax Benefit) 

(Existing Awards) Regulations 2010 

(S.I.2010 No.875) 



Report by the Social Security Advisory Committee 

under Sections 173(4) and 174(2) of the Social Security 

Administration Act 1992 and the statement by the Secretary 

of State for Work and Pensions in accordance with Sections 

173(4) and 174(2) of that Act. 



Presented to Parliament by the Secretary of State for Work and Pensions pursuant to 
Sections 1 73(4) and 1 74(2) of the Social Security Administration Act 1992. 



March 2010 London: The Stationery Office £22.00 



The Employment and Support Allowance 

(Transitional Provisions, Housing Benefit 

and Council Tax Benefit) 

(Existing Awards) Regulations 2010 

(S.I.2010 No.875) 



Report by the Social Security Advisory Committee 

under Sections 173(4) and 174(2) of the Social Security 

Administration Act 1992 and the statement by the Secretary 

of State for Work and Pensions in accordance with Sections 

173(4) and 174(2) of that Act. 



Presented to Parliament by the Secretary of State for Work and Pensions pursuant to 
Sections 1 73(4) and 1 74(2) of the Social Security Administration Act 1992. 



March 2010 London: The Stationery Office £22.00 



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Statement by the Secretary of State for Social Security 
in accordance with Sections 173(4) and 174(2) of the 
Social Security Administration Act 1992. 

The Employment and Support Allowance (Transitional 
Provisions, Housing Benefit and Council Tax Benefit) 
(Existing Awards) Regulations 2010. 

Introduction 

Employment and Support Allowance (ESA) was introduced as the benefit for 
new customers with a health condition or disability from 27 October 2008. ESA 
provides income replacement for people who are unable to work because of 
illness or disability and its associated, work focused, regime also provides 
support to help customers to return to work where they are able to do so. More 
severely disabled customers also receive higher rates of benefit. 

Following consultation, the Government set out in the White Paper 'Raising 
expectations and increasing support' (Cm 7506), published in December 2008, 
that it intended to migrate people on existing incapacity benefits (Incapacity 
Benefit (IB), Severe Disablement Allowance (SDA) and Income Support is paid 
on the grounds of incapacity ) to ESA between 2010-2013. It has now been 
decided that migration will start gradually from October 2010, with full national 
implementation from February 2011 , with a planned completion date by the end 
of March 2014. 

Schedule 4 to the Welfare Reform Act 2007 provides the powers to make 
regulations to migrate people receiving awards of incapacity benefit to ESA. The 
Employment and Support Allowance (Transitional Provisions, Housing Benefit 
and Council Tax Benefit) (Existing Awards) Regulations 2010 were referred 
to the Social Security Advisory Committee (SSAC) on 18 December 2009 
in accordance with section 170 of the Social Security Administration Act 1992. 

The draft Regulations are intended to provide for the conversion of existing 
awards of the old style incapacity benefits to ESA. The Regulations also 
provide for the award of transitional additions where appropriate to protect the 
cash level of benefit for those who move onto ESA. The draft Regulations also 
make consequential amendments to Housing Benefit and Council Tax Benefit 
provisions to reflect the conversion of the previous benefit award to ESA. 

DWP officials discussed the Regulations with the SSAC on 6 January 2010. 
After scrutiny, the Committee selected the Regulations for formal referral, and 
requested some further information from the Department to support this process. 

As a result of the meeting the Department agreed to make a number of minor 
changes to the draft Regulations and to update the Impact Assessment. 



The impact assessment is a 'living' document and has now been updated 
to reflect the latest available information. The main change is that further 
analysis has been conducted on the proportions of migrating customers that 
will be assessed to be fit for work when they go through the Work Capability 
Assessment (WCA) - which is a key part of establishing entitlement to ESA- 
and who will therefore not be eligible for ESA. As a result of the further analysis, 
we have increased our estimate of the proportion in this group from 15% to 
around 23%. This change arises from a more accurate assessment of the 
impact of the WCA on those cases that, under IB rules, do not currently have a 
face to face assessment. The impact of this increased proportion, including the 
associated increase to the estimated net savings from those found fit for work, 
has been reflected in the updated Impact Assessment. 

The Department has noted the concerns expressed by the Committee about the 
taxation and tax credit interactions that arise from this change, and is considering 
the taxation position for people who were claiming Invalidity Benefit (IVB) and 
Severe Disablement Allowance (SDA) who are not currently liable to income 
tax on that portion of their income. Therefore this section has been removed 
from the Impact Assessment. If Ministers decide to exempt these customers 
from the tax on that portion of their income when migrated to contributory ESA, 
the impacts will be assessed in the appropriate instrument. 

The Committee published the Regulations for consultation on 11 January 2010. 
The consultation period ended on 8 February and the Committee subsequently 
issued its report on 15 March 2010. 

I am very grateful both to the Committee and to those who made representations 
to it. The arguments for amending the legislation have been advanced in a 
clear and forceful way and I have considered these very carefully. 

This statement sets out, in accordance with sections 173(4) and 174(2) of 
the Social Security Administration Act 1992, my reasons as to why I have 
not felt it appropriate to give effect to the Committee's recommendations in 
full on this occasion. I have been unable to accept all the Committee's main 
recommendations. In particular I do not share the Committee's view that the 
migration of existing incapacity benefit claims should be delayed. Nor do I 
agree that the period during which we will be trialling the migration process 
from October 2010 should be extended. However, I have been able to address 
some of the concerns expressed by the Committee, and have consequently 
decided to make some changes to the original proposals. 



The Committee's Report and the Government's response 
Introduction 

1. Given that ESA is a key element of the welfare to work system the 
Committee understands the rationale for phasing out the alternative 
incapacity benefit regimes and accept that this will reduce the complexity 
of having two different benefits and two different assessment regimes. 
The Committee also believes that the transitional protection approach 
seems the most sensible and are pleased that officials have taken into 
consideration SSAC's published guidelines on the use of transitional 
protection (SSAC 12th Annual Report, May 1997 - March 1999). 

2. The Committee believes that transitional protection needs to cushion 
the transition for those who are affected, break the linking period and 
deal with the knock-on affects for other benefits, it believes that these 
Regulations go some way to achieving this and particularly welcomes the 
continued disregard of income from occupational and private pensions 
for certain clients. 

3. The Government is grateful for the Committee's acknowledgement of the 
simplification of the benefits system that the phasing-out of the incapacity 
benefits regime is trying to achieve. The Government is also pleased that the 
Committee agrees that the transitional protection approach is the most sensible 
in this case and is grateful to the Committee for establishing guidelines which 
contributed to the development of its proposals. The Government has committed 
on a number of occasions to protecting the cash level of benefits on migration 
to Employment and Support Allowance (ESA) and transitional protection will 
ensure that this is the case. The transitional arrangements will also ensure that 
over time people in similar circumstances receive the same financial support. 
The Government also welcomes the Committee's endorsement of the proposals 
to protect recipients who could otherwise see a reduction in their benefit such 
as those who have occupational or personal pension income. 

4. While the Government does not accept the Committee's recommendation 
that migration to ESA should not proceed to the current timetable, the 
Government does recognise that the Committee and stakeholders have 
some serious concerns about the Regulations which are designed to achieve 
migration and on the wider implications of migration itself. The Government 
also notes that the Committee has substantial concerns over people who will 
potentially see a reduction in overall income as a result of migration from 
incapacity benefits. These concerns are addressed in the following response to 
the Committee's report. 

The impact of migration on Tax iiabiiity and Tax Credits 

5. The Committee is concerned that while Ministers have committed on 
several occasions that no existing incapacity benefits customers will see 
a cash reduction in their benefit on conversion to ESA, the changes on 
tax liability and on tax credits may mean that those customers who have 



never had a tax liability on their benefit are significantly worse off 
financially on ESA. This group of customers are those who claimed 
incapacity benefits before 1995 and had their tax exemption protected 
when they moved to Incapacity Benefit. The Committee is also concerned 
that this group of customers may include those with a severe disability 
who would struggle to cope with a reduction in their income. The 
Committee is concerned that a full analysis of income levels was not 
included in the Explanatory Memorandum and that assumptions are 
being made about a significant minority of claimants. 

6. The Department recognises the concerns of the Committee and others 
about the income tax liability of those migrated to ESA from Incapacity Benefit 
and is therefore considering this matter further in conjunction with HMRC. 

7. In order to inform future working the Government has carried out analysis 
of the incomes of those who would start paying tax on their benefit on migration 
to ESA. This shows that those affected are likely to have a household income 
around the average for the working age population and are likely to have the 
highest household incomes of those on incapacity benefits, with around half of 
this group in the top two income deciles for the incapacity benefits population. 

8. The Committee is also concerned that the group referred to above 
also have their income from IB exempt for tax credits purposes. When 
these customers are transferred to ESA(C) their benefit will be treated as 
income for tax credits purposes. This could make a significant difference 
to payments of Working Tax Credits/Child Tax Credits. The Committee 
would like to know what analysis DWP has carried out with regard to the 
effects of these changes for Tax credits purposes. 

9. The Government recognises the Committee's concerns regarding the 
effect migration to ESA from IB will have on some customers' Tax Credits income 
and in conjunction with HMRC is considering this matter further as a result. 

10. As above the Government has also carried out analysis of the household 
incomes of those who could see a reduction in their tax credits if their benefit 
was taxable and thus treated as income in their tax credits calculation on 
migration to ESA. This shows that 80 per cent are in the top half of the working 
age income distribution and 80 per cent are in the top two income deciles for 
the incapacity benefits population. 

11 . The Committee would like to know how the Department proposes to 
prepare those affected by these changes to taxation and tax credits if 
they are implemented as they stand. It stresses that any communication 
strategy will have to be geared to reflect the needs of the different 
segments of the customer base and they must be provided with different 
messages in relation to taxation. 

12. As stated above, the Government is looking again at the position of people 
who would have had their taxation and tax credits position changed as a result 
of migration to ESA. More generally work is ongoing at the moment to ensure 
that messaging for migration is clear and suitable for different customer 



groups, giving them the information and time they need to adjust to a change 
in circumstances. The Department will draw on evidence from the introduction 
of ESA in October 2008 and is also working with PricewaterhouseCoopers on 
segmentation of the customer group to ensure that people receive the 
appropriate communications, which reflects their needs. 

13. The Committee is also concerned about the iniquities that will arise 
in connection with a phased migration. It is concerned that claimants 
who are migrated earlier in the process will potentially face reductions in 
income several years before other claimants. 

14. The Government recognises the Committee's concern in relation to 
the timing of individuals' migration to ESA. However, given the scale and 
complexity of the migration exercise (a diverse group of 1 .5 million people, 
some of whom will have complex personal circumstances), it would not have 
been practicable to migrate all customers at the same time. The Department 
has therefore designed the order of migration in the fairest way possible; the 
timing in each case will be determined by the review date for the Personal 
Capability Assessment that the customer currently has to undergo in connection 
with their claim for incapacity benefits. This date is set according to the Health 
Care Professional's prognosis of when a condition may have changed. It may 
be necessary in some cases to adjust the date to ensure that these are spread 
evenly over the conversion period. 

Trial of the conversion process 

15. The Committee welcomes a trial of the conversion process as it 
anticipates migration of existing claimants will raise broader and deeper 
issues than the introduction of ESA for new claimants. However it is 
not convinced that the trial as currently planned will allow for robust 
evaluation. The Committee feels that the trial should be extended to at 
least six months, allowing more time before national roll out. It is also 
concerned that the clerical nature of the test will not provide a true 
test of the migration process and Committee members would welcome 
more detail about the scope of the trial, including locations and numbers 
of claimants. 

16. The primary aims of the phased introduction commencing in October 
2010 are to test the customer experience of the migration process and also 
to help validate assumptions, for example around the outcomes of the Work 
Capability Assessment (WCA). 

17. As such the Department will be seeking feedback on communications, 
both content and the method of contact, and customers' reactions to the various 
elements of the process and collecting management information to inform 
planning. Valuable learning will therefore be possible as soon as activity 
commences. Relatively small numbers of customers will experience migration, 
in a couple of areas, and this should assist with rapid collection and dissemination 
of lessons. Planning is underway and it has not yet been decided yet which 
areas this phased introduction will cover. The feedback process will continue 



even after national implementation has commenced. In addition to the phased 
introduction the Department is constantly reviewing experience from ESA live 
running and looking to build in appropriate improvements to migration plans. 

18. As part of this continuous review, a number of process and policy issues 
have been identified, while others have been highlighted by external evaluation 
reports and through engagement with stakeholders and intermediaries. Activity 
to address the issues raised is ongoing in line with the Department's commitment 
to continuous improvement. 

19. While the majority of the process in the phased introduction will be clerical 
as the IT will not yet be in operation, some elements will be supported by IT, 
namely the Atos Healthcare notifications to customers and the tracking of the 
cases by Atos. Jobcentre Plus is planning for a Business/Model Office test 
supported by IT prior to the start of national migration. This is to test the 
Process Procedures Guidance and Learning materials alongside supporting IT. 

20. The aim is to run a comprehensive phased introduction without delaying 
the migration process. In the current economic climate the Government believes 
that it would be wrong to deny customers on incapacity benefits 
the support ESA will offer them to either return to work or move closer to the 
labour market, potentially leaving them behind as the job market strengthens. 

Winners, losers and complexity 

21. The Committee has stated that these proposals are highly complex 
and its concerns aboutthe apparently arbitrary outcomes of theapplication 
of the proposed regulations in a number of possible real-life scenarios 
led it to put together some illustrative examples. As it has noted, as the 
proposals stand there will be losers at the point of change (and some 
gainers, as well). The Committee found it both challenging and time 
consuming to work through the examples set out at Appendix 1 of their 
report, and even after detailed consideration of all the elements involved 
it cannot be certain that the calculations are accurate. Nonetheless, 
they demonstrate why the Committee has questioned the rationale for 
a transition that may leave some IB claimants significantly worse off 
simply because their claims date from before 1995. 

22. The Government is grateful for the time the Committee has taken to fully 
examine these proposals and as stated above, the Government takes very 
seriously the Committee's concerns about those claimants who may have a 
reduced income due to a change in tax liability and is therefore considering this 
further. However, the Government does not accept that the outcome of the 
Regulations is arbitrary or unfair. The Regulations provide that customers will 
have their benefit position protected on migration to ESA. Given that the 
Regulations need to deal with the position of 1.5 million people, many of whom 
have widely differing circumstances, it is inevitable that there is a degree of 
complexity, but the underlying principle is simple - that benefit income at the 
point of change will be protected. 



23. The Committee also highlights that as part of migration some 
customers with existing child allowances and premiums will have these 
transferred to an award of Child Tax Credits. It notes that this will lead 
to some customers becoming worse off because of this change even 
though the transfer to ESA does not of itself lead to a loss of income. The 
Committee recommends that the Department examines how claims which 
involve this double migration will be managed, and in particular, looks at 
how the outcome of these arrangements will be communicated to 
claimants. 

24. The Department acknowledges that when Child Dependency Allowances 
are moved to Child Tax Credits (CTC), some customers will lose their entitlement 
to income related benefit altogether as their income from other sources exceeds 
their adult allowances. If this leads to a customer losing entitlement to benefit 
altogether they will then become entitled to awards of National Insurance credits 
to protect their future pension rights and will be transferred to ESA after 
incapacity benefits customers with benefit in payment have been migrated. As 
the Committee points out, this is not as a result of migration to ESA but is part 
of the interaction of CTC and income related benefits and has been the position 
since April 2003. 

25. The Department is aware of this issue, which also occurs when the 
youngest child of a lone parent reaches the age of 10 and IS ends. Jobcentre 
Plus and HMRC will build on the lessons learnt from the recent lone parent 
obligation changes and are currently examining how best to carry out this 
transfer, including how to ensure that communications meet the needs of this 
vulnerable group of customers. 

Loss of access to passported entitlements 

26. The Committee was concerned that the regulations as drafted could 
lead to a customer who had an entitlement to ESA(IR) losing passported 
benefits. This situation arises when a customer has an entitlement to 
ESA(IR) but there is no actual award made due to it being less than 10p. 

27. The Government thanks the Committee for bringing this to its attention 
and can reassure the Committee that the draft regulations have been amended 
accordingly. This means that customers with an entitlement of less than 10 
pence a week will still be eligible for passported benefits even though no actual 
ESA will be paid. 

Jobcentre Plus - capacity issues 

28. The Committee has been impressed with the way Jobcentre Plus 
has coped with the additional demands on its service over the past 12-18 
months, however it has concerns about the capacity of Jobcentre Plus 
(and the medical service contractor's) both to migrate the anticipated 
volume of incapacity benefit clients to ESA in the proposed timetable and 
to provide an effective service to the client group. The Committee would 
like reassurance on the point made in the Explanatory Memorandum that 
steps are being taken to increase the medical capacity that is available to 
undertake the necessary medical assessments. 



29. The Government appreciates the Committee's recognition of the work of 
Jobcentre Plus at a time of unprecedented pressure caused by the economic 
downturn. 

30. The Government recognises that migration represents a significant 
challenge to medical services capacity and the Department has been working 
with the provider, Atos Healthcare, to develop, pilot and implement a range of 
initiatives that will increase capacity sufficiently to deliver migration. These 
include: process changes to enhance efficiency; use of physiotherapists to 
carry out some forms of assessment and a series of measures taken by Atos 
Healthcare to enhance their recruitment and retention policies. 

31. The Committee questions whether a three year timetable for 
migration is feasible in the current economic climate and urges the 
Department to reconsider how best to apply limited resources. It would 
suggest that a more pragmatic use of the Department's resources may be 
called for and that a full IB migration on a short timescale may not be the 
most immediate priority in terms of what the required investment can be 
expected to achieve. 

32. The Government does not feel that it is appropriate to slow down the 
programme of welfare reform at a time when people need more help to find 
work. Incapacity benefits customers are among those most in need of this help, 
especially as many have been on benefit with no help to engage with the labour 
market for many years. ESA is designed specifically to provide this help to 
disabled people and those who have health conditions and the Government 
feels it would be unfair to deny them this help. For those customers who have 
severe disabilities or illness and could not reasonably be expected to work, 
ESA could mean that they are better off and it would again be unfair to delay 
their migration to ESA. 

33. The Committee would also suggest that if these proposals are to go 
ahead, they should be reviewed to see where the programme could be 
trimmed back. For example, by allowing those close to state pension age 
(but not yet reaching pension age during the migration period) to remain 
on their existing benefit. 

34. The Department already plans not to migrate people who reach State 
Pension Age within the migration period, in order to avoid potentially moving 
them to a new benefit for only a short period of time. However, as one of the 
Government's objectives for moving people to ESA is to help as many people 
as possible prepare for and find work, further excluding older people from the 
migration exercise would deny them the help and support that ESA provides 
and contradicts the Government's strategy to ensure that people up to State 
Pension Age have support to return to work. The Government recognises that 
people who are nearing State Pension Age may need more time and support to 
take steps towards work, however they should not be written off for this reason. 

35. Another objective of migration is to ensure that people in similar situations 
are treated fairly and receive the same help and support. Not migrating certain 
customers would mean that this is not the case. The aim is also to simplify the 



8 



benefit system ensuring that there is one benefit for people whose ability to 
work is limited by a disability or health condition. To exclude certain customers 
who will not have reached State Pension Age by the end of migration would 
mean that there would still be two different benefit systems running, with two 
different sets of rules and forms and two different medical assessments, which 
goes against the principle of benefit simplification. 

Effective support for claimants 

36. The Committee is not convinced that the required level of 
personalised, flexible support will be available for all migrated clients, 
particularly in areas with a high IB claimant count. Whilst it welcomes the 
Department's current review of the main support programme - Pathways 
to Work - it is concerned that the roll-out of ESA for stock claimants will 
be well advanced before a revised Pathways model is implemented 
nationally. It notes that the stock of incapacity benefits claimants contains 
significant numbers of the most vulnerable long-term benefit claimants. 
In addition to their health conditions and disabilities, they are likely to 
present complex and multiple problems and barriers to employment. 
Without an established, fully-functioning support in place and ready to 
address the needs of this group, there is a risk that there will be no 
suitable services to offer these claimants. 

37. The Government is aware that many of those who will be migrated from 
old style incapacity benefits will face complex barriers to employment. The 
Government recently published its spring Command Paper, Building bridges to 
work: new approaches to tackling long term worklessness, which sets out what 
support will be available for customers moving to the more work focused regime 
of ESA and to JSA. The command paper sets out plans to provide a more 
personalised conditionality regime coupled to a more flexible support package 
for ESA customers. It also sets out plans for people on ESA who reach two 
years on the benefit, and who want one, to be provided with a guaranteed Work 
Choice place. For JSA customers, the paper sets out the extra support that will 
be developed for people who are newly assessed as fit for work including additional 
adviser time, specialist jobseeking/motivational support and for the first time 
health related provision to help customers and advisers identify better the level 
and type of support an individual needs to manage their health to enable a 
return to work. 

38. The Department will ensure that customers have access to support as 
they migrate from Incapacity Benefits to ESA from October 2010. The migration 
process will be starting in October 2010, and the Department will engage with 
each customer before their Work Capability Assessment, so that they have a 
clear understanding of what will be expected of them and crucially what support 
will be available to them to help them through this change. The Department 
expects to be able to implement the new programme for ESA customers from 
April 2011 . Where existing contracts expire before this, it will discuss with providers 
how best to ensure that customers continue to have access to adviser support. 

39. The Department expects to be able to implement the new programme of 
support for JSA customers from April 2011 . Customers moving from Incapacity 



9 



Benefit and Employment and Support Allowance who claim JSA prior to April 
2011 will be able to access the range of support that is already available on 
Jobseeker's Allowance. This offers a personalised service, tailored to individual 
needs and already provides support and flexibilities for customers with a health 
condition or a disability. 

40. The Committee is also concerned about the level of support that will 
be available for, what it anticipates, will be a significant majority of the 
client group who will move to a much more active benefit (JSA). It 
welcomes DWP's proposal, as part of the Pathways review, for making 
improvements to the support provided to JSA customers with a health 
condition or disability (particularly those customers who have been 
disallowed from ESA following the WCA), but does have concerns about 
the timing for implementation; many customers will have flowed from 
incapacity benefits onto JSA before the revised model is implemented. 

41. As mentioned above in paragraph 37, the Command Paper, Building 
bridges to work: new approaches to tackling long term worklessness, was 
recently published and it set out the support that will be available to those 
moving from incapacity benefits onto JSA. It looks at extra health related 
support for people who are found fit for work, with a particular focus on additional 
support for people who will be moving from incapacity benefits to Jobseekers 
Allowance. The Department will engage with each customer before 
their Work Capability Assessment, so that they have a clear understanding of 
what will be expected of them and crucially what support will be available to 
them to help them through this change. 

42. While the Department develops this new health related provision for JSA 
customers from April 2011, prior to this we will ensure that where appropriate 
customers moving from incapacity benefits will be able to access support from 
the disability employment adviser network who can provide access to specialised 
disability services. In addition to this, Jobcentre Plus Work Psychologists also 
provide help to progress customers with health conditions and disabilities into 
work. This includes providing advisers with advice and support to help customers 
into work and undertaking specialist assessments with customers with more 
complex needs to identify appropriate work solutions. 

Administrative issues 

43. The Committee is concerned about the current administration of 
ESA, particularly with regard to the Work Capability Assessment and 
the appeals process. It uses as an example that more claimants than 
anticipated have been found fit for work and consequently the number of 
appeal cases has been higher than expected. It is also concerned that 
anecdotal evidence suggests that in some areas health assessments are 
not being completed within the 13 week assessment phase, which has 
implications for support, particularly for contracted provision. 

44. Since the introduction of ESA in October 2008 the Department has been 
continuously monitoring the performance of ESA and making improvements to 
the system where the need arises. Where delays occurred action has 



10 



been taken and it is a feature of the design of the ESA regime that benefit 
is backdated automatically where the WCA has been completed beyond the 1 3 
week assessment phase. 

45. In response to higher than expected numbers of customers being found 
fit for work the Work Focused Health Related Assessment (WFHRA) no longer 
takes place at the same time as the WCA and is only carried out for customers 
who are placed in the Work-Related Activity Group. Another step that has been 
taken is that no customer will be referred for a second Work Focused Interview 
(WFI) until they have been placed in the Work-Related Activity Group. Referral 
for first WFIs for new ESA customers will still go ahead even if the outcome of 
the WCA is not yet known as this interview is an opportunity to ensure that the 
customer is fully aware of what the ESA regime will mean for them and what is 
expected of them. Migrated customers will undergo the WCA before they are 
migrated to ESA and thus will not receive any WFIs until they have been placed 
in the Work-Related Activity Group. 

46. The Department recognises the impact that higher numbers of customers 
being found fit for work is having on the appeals system across the whole end 
to end process. Joint work is underway across DWP and the Tribunals Service 
(TS) to mitigate the increased volumes by focusing on four areas: 

a. Streamlining processes within both DWP and TS - including an end to 
end review of the appeals process. 

b. Reducing the number of appeals - through looking at the messaging 
used to manage customers' expectations and in particular the language 
in the disallowance letter. 

c. Increasing capacity in the TS - through increasing administrative, judicial 
and medical resources, so that it can hear more appeals. 

d. Strengthening the working relationship between DWP and TS 

This monitoring of the ESA regime is ongoing and is intended to address any 
issues that may arise before national migration commences in February 2011. 
It is also being used to ensure that the system is as simple and as smooth as 
possible for the potentially more vulnerable customers who will be going through it. 

47. The Committee does however, appreciate that the differences 
between new and stock claimants are likely to lead to lower proportions 
of stock claimants being assessed as fit for work. They understand that 
the Department estimates that this figure will be 23 per cent, but it believes 
that it is essential that the Department makes contingency plans in the 
event that the actual proportion rises significantly more than expected. 

48. Acknowledging the concerns the Committee and others have expressed, 
the Department conducted further analysis on the proportion likely to be 
assessed as fit for work. This has resulted in increasing the previous estimate 
from 15 per cent to around 23 per cent. The new assumption is being used for 
internal capacity planning. The Department will use evidence from the early 
migration phase to keep this important estimate under review and will also 



11 



carry out sensitivity analysis to understand the implications if the proportion 
assessed as fit for work is higher than estimated. 

Work Capability Assessment - outcomes and impacts on claimants 

49. The Committee is concerned about the consequences of the 
imposition of the Work Capability Assessment (WCA) on incapacity benefits 
claimants, particularly in terms of what will happen to those who fail a 
test that is intended to be more rigorous than the Personal Capability 
Assessment for IB. Failing the WCA will have an impact both on individual 
claimants and on Jobcentre Plus/providers. It points out that the consequences 
of migration will be difficult for many customers, especially those moving 
to an active work focused regime and Jobseeker's Allowance (JSA) and 
the Committee encourages the Department to focus strongly on ensuring 
that the right support is in place before any migration is attempted. 

50. The Government agrees with the Committee that it is important the 
right support is in place to support those customers moving to a more active 
regime. That is why the Department's Command Paper, Building bridges to 
work: new approaches to tackling long term worklessness published in March 
2010, sets out what support will be available for these customers, including 
extra health related support for people who are found fit for work, with a 
particular focus on additional support for people who will be moving from 
incapacity benefits to Jobseekers Allowance. 

51. The Committee also points out that it is a matter of major concern 
amongst the welfare community, and a main theme of the responses to 
their consultation, that the standard of assessment is not always good 
enough, especially for people with mental health and cognitive difficulties. 

52. The WCA is carried out by specifically trained healthcare professionals 
who are able to provide independent advice to decision makers regarding a 
customer's functional capability. It is important to note that Atos Healthcare 
practitioners only act in an advisory capacity; decisions on benefit entitlement 
are made by DWP Decision Makers. Additionally, if a Decision Maker is not 
satisfied with the quality of medical advice in a report then they can return it to 
Atos to be redone. 

53. Atos Healthcare professionals carrying out the assessments are trained 
in disability assessment medicine in order to assess the capability of an 
individual. They are given specific training including assessing individuals with 
Mental Health conditions, supported by a series of evidence based protocols. 
They also receive ongoing medical education in order to remain up to speed 
with developments in the field of disability medicine 

54. Stringent quality checks are an integral part of all the medical advice 
provided by Atos. The contract between Atos Healthcare and DWP includes quality 
and accuracy targets and the work of all health care professionals is subjected 
to random quality audit. Any reports found to be deficient in the audit are 
corrected prior to them being returned to the Department's decision makers. 



12 



55. A healthcare professional's work can also be subjected to audit if it is 
found that any work is reported to be deficient on an opportunistic basis, 
for instance if the healthcare professional is subject to significant levels of 
customer complaints or the Department's Business Unit returns medical reports 
which are considered deficient by the decision maker. Where there 
is any cause for concern, proactive management intervention ensures that 
remedial action is taken promptly 

56. The quality of Atos Healthcare's audit is validated by senior medical 
auditors from Atos Healthcare and doctors working for the Chief Medical Adviser 
to the Department. 

57. The Committee keenly awaits the findings and recommendations 
of the review of the WCA which is focusing particularly on whether the 
WCA is accurately identifying individuals for the most appropriate support 
and accounting for adaptation. It is however disappointed that the roll- 
out of migration to ESAwill go ahead before any revisions to the WCA will 
have been implemented. The uncertainties around the future development 
of ESA do not make for the necessary stable platform for the migration of 
IB claimants. 

58. The Departmental review of the WCA has recently been concluded. 
Evaluation of the assessment by medical experts identified that the assessment 
was accurate. However, to further improve the WCA and better account for 
adaptation a list of recommendations has been agreed by the Secretary of 
State. The full report of the Departmental review is published with the spring 
Command Paper. 

59. The Government is committed to implementing these changes to ensure 
that the WCA achieves the highest levels of accuracy in identifying individuals 
for benefit. 

60. The independent (external) review, which is distinct from the Departmental 
review, is currently being commissioned and will report its first findings later 
in 2010. 

61. Both these reviews are enabling the Department to continue to improve 
the WCA. The WCA was always intended to be dynamic in this way, irrespective 
of the need for migration. 

62. And migration is needed - the Government is determined that existing 
customers should not continue to be left behind - or, in any sense, 'written off' 
- even if they have been on benefit for a number of years. Those who have 
been on benefit for a number of years are among those who need the most 
support - this is what the Employment and Support Allowance regime can 
provide. The Government's plan to migrate people from Incapacity Benefit and 
IS paid on incapacity grounds to Employment and Support Allowance will ensure 
that, over time, new and existing customers are treated equally and receive the 
same financial help and support to return to work. The WCA is a key tool in this 
process, which also helps to identify the more severely disabled customers 
for additional financial support. In addition, customers who are placed in the 



13 



Work-Related Activity Group will also receive a WFHRA which does not impact 
benefit entitlement but is an important addition to the assessment for those who 
are found to have limited capability for work. The WFHRA provides the opportunity 
for customers to discuss their aspirations, beliefs and perceptions about 
engaging in work with a health care professional, identifying the health-related 
challenges preventing an individual moving into work and interventions or types 
of work-place adaptation which might help to overcome these challenges. 

63. Impacts for claimants are likely to be felt on both health and financial 
fronts, and it is important that the Department communicates the proposed 
changes clearly to customers, particularly those who would be financially 
worse off following the proposed migration (those moving to JSA or off 
benefit). The Committee has observed that the Department's communications 
strategy for the introduction of ESA did not achieve the hoped for levels 
of public awareness and understanding (and respondents to the Committee's 
consultation have pointed to ESA continuing to be a poorly understood 
benefit). The proposed migration poses as great a communications challenge, 
and the Department and its partners and providers will need to find more 
effective ways of getting key messages across to a group that may not 
have access to, or be responsive to, mainstream information channels. 

64. The Department recognises the importance of a comprehensive 
communications strategy for customers, intermediaries and staff. Work to 
develop and test this strategy both for ESA and migration is ongoing. A 
comprehensive round of stakeholder engagement has been undertaken in 
recent months where one of the issues discussed has been communications. 
This, together with Departmental analysis following the introduction of ESA, 
means there is now a much clearer view of the way forward. 

65. A Departmental Communications Assurance Group has been established 
which will provide strategic oversight as this work develops - ensuring that 
the strategy: 

• supports the culture and associated behavioural change required for the 
effective delivery of ESA and migration; and 

• that it is developed, deployed and delivered effectively. 

66. There is also an ongoing commitment to actively involve external 
stakeholders and intermediaries as this work progresses. 

67. The Department has also been working on segmenting the customer 
group in order to understand customers and improve the migration process in 
a number of ways. Working with PricewaterhouseCoopers the Department has 
been developing segments that aim to: 

• inform migration planning and communications; 

• inform wider policy making for this customer group; 

• produce segments that are actionable, distinct, stable and recognisable 
to stakeholders. 



14 



68. This work is ongoing and involves detailed analysis of administrative data 
sources, followed by further analysis using the results of qualitative and 
quantitative research. 

Summary of Responses to the Consultation 

69. The Committee's consultation received a total of 18 responses 
and respondents addressed both transitional issues and the wisdom of 
the migration. 

70. Respondents welcomed the transitional protection for claimants 
migrated to ESA (and the associated HB/CTB additions), particularly with 
regard to streamlining the migration process. A number of respondents 
also welcomed the gradual alignment of benefit rates. The treatment of 
Occupational and Private Pensions as detailed in the Regulations was 
also welcomed. Another respondent welcomed the HB additions, which 
ensure that changes to income will not affect transitional allowance, thus 
avoiding a work disincentive affect. 

Implementation and administration 

71. There were a number of concerns and recommendations around 
implementation and administration that mirrored the Committee's views. 
These were that, some customers' overall income would not be protected 
due to the change in the taxation rules, that JCP will not be able to offer 
the right level of support for incapacity benefits customers who find 
themselves on JSA, now is not the time to be undertaking migration due 
to the current ESA system having a number of administration problems 
and a concern that migration will be more about moving people off benefit 
rather than into work. Concerns were also expressed that there was no 
mention in the Explanatory Memorandum about funding for the independent 
advice services which have seen an increase in their caseloads with the 
introduction of ESA at a time when their funds are being reduced. They 
stress the importance of their services to vulnerable customers. 

72. The Department will be providing a suite of products in consultation 
with advice services prior to migration. This will provide those supporting 
customers with the necessary information to advise and issue material to 
their customers directly, ensuring a greater focus and reach than is possible 
through Departmental communications alone. 

73. A number of the contributions also made suggested amendments to 
the Regulations. These were that additional time should be allowed 
between the effective date and the termination of entitlement for those 
who will not be migrated to ESA, to allow time for alternative benefit 
claims to be processed. Claimants who will have their benefit increased 
by migration should not have this delayed until the effective date. Those 
appealing the ESA decision should remain on their existing benefit until 
their appeal is determined. It has also been suggested that IB/SDA 
customers who are exempt from the PCA can currently carry out permitted 
work for an unlimited period. It has therefore been suggested that 



15 



transitional protection is extended to support such cases, at the very 
least to allow those currently in permitted work to retain eligibility for the 
first 52 weeks after migration. 

74. Each customer's entitlement to their incapacity benefit will terminate with 
effect from the effective date, as determined. This is designed to fall between a 
minimum of 15 days and a maximum of 27 days after the date of the notification. 
Giving the customer advance notification of this date within the outcome 
decision is intended to aid a seamless transition between awards (where 
appropriate). This approach delivers a straightforward, consistent approach for 
all, and avoids the complications which would flow from setting different effective 
dates depending on the outcome. 

75. The Government does not consider there is any justification for keeping 
customers who do not qualify for conversion, and appeal, on their existing 
benefit (or in IS cases, on their existing rate of benefit) until their appeal 
is determined. 

76. IB, SDA and IS customers who do not satisfy a further condition of 
entitlement to IS (i.e. entitlement other than on the grounds of disability/ 
incapacity) who do not qualify for conversion and appeal will automatically 
be entitled to ESA at a rate equivalent to the assessment phase rate until the 
appeal is heard or otherwise disposed of. They will not need to make a claim. 
This follows the existing ESA provisions which are designed as a customer- 
friendly easement and are unique in the benefit system. 

77. IS customers who do not qualify for conversion but who do satisfy a further 
condition of entitlement to IS will, even if they appeal, remain on IS - to minimise 
disruption for them - but will not receive the disability premium (where this was 
payable solely on account of their long-term incapacity, not where it is payable 
on any other grounds). If they have appealed, and the appeal is successful, 
they will be switched to ESA. If the appeal is unsuccessful, they will simply 
remain on IS. 

78. IB, SDA and IS customers who do not satisfy a further condition of 
entitlement to IS who do not qualify for conversion and do not exercise their 
right of appeal may claim JSA. Jobcentre Plus will make additional calls to 
these customers to explain their options to them, those wishing to make a claim 
to JSA will be transferred to someone who is able to take this claim, ensuring 
that JSA is in place when entitlement to incapacity benefits ends. 

79. ESA has permitted work rules which both apply for 52 weeks and which 
apply for an unlimited time. The Government will consider the position further 
of those whose permitted work becomes time limited on conversion to ESA 
when it was previously unlimited. 

Potential losers - tax, tax credits and passported benefits 

80. A number of respondents commented on the fact there will be 
potential losers as a direct result of migration, particularly those who 
have previously been exempt from taxation on that portion of their benefit 



16 



and those who may see a reduction in their tax credits allowance. 
It was recommended that ministers should give the same assurances for 
tax credits as for benefits - i.e. that loss of income should not result from 
migration to ESA. It was also felt that DWP and HMRC should fully explore 
the impact of the Regulations on tax credit claimants. 

81 . The Law Centre (Northern Ireland) also highlighted a separate group 
of potential losers - claimants whose private income exceeds their child 
allowance. This group of claimants will lose entitlement to income-related 
benefits (except HB), which can lead to the loss of passported benefits, 
including school meals. 

82. As stated in paragraph 6, taking into account the concerns of the 
Committee and other stakeholders the Government is going to consider further 
the taxation and tax credits position on migration to ESA. 

83. The Department recognises that there will be a small number of people 
who have an entitlement to IS which is exceeded by the child allowances 
payable as part of that benefit. If a customer's applicable amount is exceeded 
due to moving support for children to Child Tax Credits it is the case that they 
may lose their passport to certain benefits. However, it is likely that they will be 
entitled to the same benefits through making a separate claim to them. For 
example, someone receiving Child Tax Credits will be eligible for free school 
meals if their income is at or below £16,040 a year. They can claim these by 
contacting the local authority. 

Disabled students 

84. The Child Poverty Action Group (CPAG) raised the issue of potential 
losers as a result of migration. They are concerned about losses for 
disabled students on IS who do not receive DLA. Under the proposed 
Regulations such claimants will not be eligible for ESA(IR) and will 
therefore suffer a financial loss and loss of support as a result of the 
proposed Regulations. 

85. The Department is grateful to the Committee and the CPAG for 
bringing this issue to its attention. The Department has modified the draft 
regulations to ensure that disabled students who, at the point of migration, 
satisfy the conditions for IS will be treated as satisfying the conditions for 
income-related ESA. 

Effective customer communications 

86. A number of respondents highlighted the need for an effective 
communications strategy, not only for customers but also for key 
stakeholders such as HMRC, disability organisations, welfare rights 
organisations and Local Authorities. Respondents stressed that information 
materials need to meet the diverse communication needs of the client 
group that will be impacted by migration and for claimants who may see 
a reduction in their income, this needs to be communicated clearly to 
claimants well in advance of the impact and that appropriate advice and 



17 



support is provided by the Department. It was recommended that Draft 
communication material should be shared with stakeholders, to ensure 
that the key messages are clearly communicated, correct and complete. 

87. The Department is aware of people's concerns around the communications 
for ESA and are grateful for the feedback. The Government recognises the 
importance of a comprehensive communications strategy for customers, 
intermediaries and staff. Work to develop and test this strategy both for ESA 
and migration is ongoing. There is also an ongoing commitment to actively 
involve external stakeholders and intermediaries as this work progresses. 

88. Significant work is in progress to support people through each stage of 
the customer journey. The Department has consulted widely with stakeholders 
on the migration process and discussed both the best methods and the content 
of key communications with them, taking into account the widely differing needs 
of this diverse and complex customer group. 

89. The Department is also engaged in segmentation and customer insight 
work to further understand the interventions and communications that will be 
appropriate for an individual's specific circumstances. 

90. It has been agreed that stakeholder and representative groups will be 
involved in focus groups to quality assure communications. A suite of products 
prior to migration will provide information not only for the customer, but also for 
the advocates and advisers who support them. This will provide those supporting 
customers with the necessary information to advise and issue material to their 
customers directly, ensuring a greater focus and reach than is possible through 
Departmental communications alone. 

91 . The generic letters to customers, produced by Jobcentre Plus's IT system, 
have been widely criticised by customers and stakeholders. A stand-alone IT 
system is therefore being used to deliver notifications which are precisely 
tailored to the individual. 

Support for claimants 

92. There was concern addressed for customers who will find themselves 
moved further away from the help and support they require if they are 
found not eligible for ESA, particularly for those who then find they are 
not eligible to JSA due to income and not meeting the contribution 
conditions for JSA(C) meaning they will receive no support. There was a 
feeling that the Explanatory Memorandum failed to recognise the practical, 
emotional, financial and health related adjustments that migration would 
mean for many customers and that the level of assistance required to 
support the most vulnerable customers through the claim process had 
been underestimated. The Action Group felt that vulnerable customers 
would encounter difficulties when confronted by the automated telephone 
service or the on-line application processes preferred by Jobcentre Plus. 
Concern was also expressed for customers with mental health and 
learning difficulties placed on JSA, that they may struggle with the regime 
and find themselves subject to sanctions. 



18 



93. The Government recognises that migration is going to be a challenging 
transition for some customers whichever benefit they move to. Taking on board 
the concerns of the Committee and others and lessons learnt from the current 
ESA process, Jobcentre Plus has designed the migration process to ensure 
that there is the help customers will need to be supported through the process. 
Extra phone calls to the customer have been built in to the customer journey to 
help ensure that they understand the migration process at every stage and 
what it will mean for them. The system has been designed to help enable 
Jobcentre Plus staff to identify vulnerable customers early on in order to provide 
them with appropriate support to comply with the process. There are also 
provisions for Atos Healthcare to make home visits to carry out assessments 
should customers be unable to attend the Medical Examination Centre. The 
Government aims to make the transition from the old incapacity benefits to ESA 
as smooth and simple as possible for these customers and migration has been 
designed with these principles in mind. 

94. It is currently the case that if a customer has had a Period of Incapacity 
for Work (PIW) the Department can look back at that customer's contributions 
record from when the PIW commenced to see if they would have satisfied the 
contribution conditions for JSA at the time. If they would have, they will then be 
entitled to contribution based JSA. Even if a customer is not entitled to 
contributory JSA they may still be entitled to income-based JSA. Customers 
who do not qualify for either contributory or income-related JSA will still be able 
to claim National Insurance Credits, provided they fulfil the requirements of 
the JSA regime, and will be entitled to the employment support provided 
through JSA. 

95. The submission from Sheffield Hallam University/The University of 
Dundee drew attention to the body of evidence which illustrates that 
many long-term incapacity claimants are a significant distance from the 
labour market, requiring in-depth support. The majority of these claimants 
have no formal qualifications, have been out of work for at least 5 years 
and face multiple obstacles to work. The evidence illustrates the need for 
demand-side, as well as supply-side measures to support long-term 
incapacity benefit claimants into work. 

96. The Government agrees that many long-term incapacity benefits 
customers are a significant distance from the labour market and require greater 
support to move into work; this is why it is essential that these customers 
receive the support ESA can offer as soon as possible. 

97. While labour demand has fallen, the labour market has continued to 
create vacancies throughout the recession (Jobcentre Plus still receives more 
than 10,000 vacancies every working day). This can be expected to pick up 
during 2010 in line with HM Treasury forecasts for positive economic growth in 
this year and next. 

98. It appears that a turning point in the labour market has already been 
reached with both ILO and claimant unemployment starting to level off or even 
fall, and business surveys show an increasingly optimistic picture, particularly in 
terms of firms' recruitment and employment intentions. 



19 



99. The Government believes that it would be wrong to delay plans to migrate 
current incapacity benefits customers to ESAas the help and support they will 
receive on ESA will mean they are nearer to the labour market as the economy 
strengthens and therefore in a better position to find work. It would be wrong to 
leave them behind just at the time when the jobs market is opening up. 

Work Capability Assessment 

100. The majority of respondents raised serious concerns about the 
WCA. They were concerned both about the quality of the assessments 
and the ability of the WCA to accurately assess the impact of health 
conditions and disabilities on daily life and the ability to work. The WCA 
was seen to be a particular problem for those with mental health/learning 
disability and fluctuating health conditions and there is a concern that 
failing the WCA could lead to a decline in mental health. CAB called for a 
more personalised approach to the WCA process, taking account for 
example of age, education and skills. 

101. As mentioned above, the WCA is subject to stringent quality control as 
well as a number of different reviews to ensure it is achieving its aims. 

102. A range of representative groups are engaged in the Departmental review 
of the WCA, including CAB. 

103. Mind drew attention to a number of flaws with the WCA and were 
concerned that the volume of claimants to be migrated would only 
exacerbate these existing problems. Case studies and evidence from key 
stakeholders revealed that assessments are sometimes carried out in 
open, noisy environments, by staff with little experience of mental health 
issues and sometimes at very short notice. Mind also highlighted the 
Work and Pensions Select Committee report on decision making and 
appeals in the benefit system, which reported similar concerns about the 
WCA and the appeals process. 

104. A number of respondents suggested that the Department's estimate 
of only 15 per cent of migrated claimants being found fit for work was 
rather optimistic and were concerned about the likely impact on the 
appeals system. 

105. The intention is that the assessment is conducted sensitively by an 
approved healthcare professional. In order to create a suitable environment, 
individuals are encouraged to bring a friend or relative with them to the 
assessment. Assessments are carried out in a private, purpose-built room 
within a medical examination centre. 

1 06. Please see paragraph 52 for more information on the training of healthcare 
professionals to assess a wide range of conditions, including those which may 
affect mental, cognitive or intellectual function. 

107. The Department has revised its estimates of the number of customers it 
expects to be found fit for work and as explained above is working with the 



20 



Tribunal Service on a range of measures to deal with the anticipated volumes 
of appeals. 

108. Several respondents were concerned that the issue of PCA-exempt 
claimants was not addressed in the Regulations and it was recommended 
that those currently exempt from the PCA should be automatically treated 
as meeting the conditions for the ESA Support Group. They also 
recommend that claimants should be considered under regulation 10 of 
the Social Security (Incapacity for Work) (General) Regulations 1995, 
which provides that people with severe conditions should be treated as 
incapable of work. 

109. Entitlement for ESA is based on how severely a condition affects an 
individual's ability to function. This is in order to correctly identify the most 
appropriate benefit and support. This is fairer than using criteria based on 
specific conditions or diagnoses, which affect different individuals in very 
different ways. 

110. However, the Government does recognise that there are certain individuals 
for whom a return to work is unlikely, because of the severe level of functional 
limitation that they experience. All cases are looked at by an approved 
Healthcare Professional (HCP) at the outset, and where an HCP identifies 
individuals with the most severe limitations, they will contact the treating 
physician for further evidence. Advice can then be provided to place such 
individuals directly into the ESA Support Group without asking them to attend a 
face-to-face assessment. In the Support Group, individuals will receive the 
highest rate of benefit and will not be mandated to participate in work-related 
activity, although they can volunteer to do so if they wish. Unlike the existing 
Incapacity Benefit exempt group, the criteria for this group are not based on the 
nature of health conditions or disabilities, but on how severely these conditions 
impact on an individual's ability to function. As such, having a specific condition 
in itself is unlikely to make someone qualify for entry to the Support Group. The 
Department does not want to write anyone off and wants to look at everyone as 
an individual. 

Appeals 

111. Respondents were concerned about the length of time it is taking for 
appeals to be heard and the financial (and associated emotional and 
health) impacts of this for claimants. During an appeal against a fit-for- 
work decision claimants will be paid the assessment phase rate of ESA, 
which can mean vulnerable customers facing financial hardship and 
potentially being on a reduced rate of benefit for some time. Respondents 
were also concerned about the lack of support for claimants during the 
appeals process. 

112. Steps being taken to improve the appeals process are addressed in 
paragraph 46. 



21 



Treatment of Occupational and Private Pensions 

113. Respondents were concerned with the important principle that 
customers should not see a reduction in their overall benefit income 
solely because of the migration process. They therefore welcomed the 
ongoing protection for certain customers with regard to occupational 
and private pension disregards. However, they felt that the Regulations 
did not make it clear whether this protection would also be afforded to 
claimants who were currently protected under the linking rule (i.e. those 
who had claimed IB after 6 April 2001 but who could link to a claim before 
6 April 2001). Respondents also felt that protection should be extended to 
recipients of the highest rate of the care component of DLA. 

114. All customers who qualify for conversion to ESA and who are, at the point 
of conversion, benefiting from the preserved right to a full disregard of prescribed 
occupational and private pensions will continue to be able to benefit from that 
preserved right after conversion. This includes customers entitled to the highest 
rate of the care component of DLA in respect of whom section 30DD(1 ) of the 
Social Security Contributions and Benefits Act 1992 is currently dis-applied by 
virtue of Regulation 26 of the Social Security (Incapacity Benefit) Regulations 1 994. 

Claimants living abroad 

115. One of the respondents highlighted the fact that the Regulations do 
not clarify the position for long-term claimants of incapacity benefits 
living abroad (permanently or otherwise). There are implications both for 
benefit entitlement and for entitlement to medical treatment (via the 
European Healthcare Certificate E121) for such claimants. Official 
statistics show that there are approximately 10,500 claimants of IB under 
the "living abroad or unknown" location code. This is likely to include 
claimants who are exempt from the PCA and those who are not. The 
Committee would like clarification from the Department of the proposed 
provisions for this group. 

116. For the purposes of the migration exercise, the Government intends to 
treat those customers on Incapacity Benefit and Severe Disablement Allowance 
who are living abroad no differently from customers who are living in Great 
Britain. They will undergo migration in the normal way and within the planned 
timetable i.e. ending in March 2014. The Government is currently considering 
how best to achieve this. 

Housing Benefit/Council Tax Benefit 

117. Respondents welcomed the Regulations which provide for 
transitional protection to be extended to HB and CTB. However, one 
respondent (CIH) was disappointed that the proposed Regulations do not 
alleviate the 'better off problem' for couples - where a couple can be 
disadvantaged (by as much as £30 per week) because the 'wrong' member 
of the couple makes the claim for HB/CTB. CIH note that this problem was 
created by the introduction of ESA, and is unique to HB/CTB, but could be 
completely eliminated by further simple amendments to the Regulations. 



22 



118. The Government notes the disappointment that the proposed amendments 
do not alleviate the 'better off' problem for couples. This issue is not caused by 
these conversion proposals but arose from the introduction of ESA because the 
structure of Housing Benefit/Council Tax Benefit (HB/CTB) for ESA customers 
reflects that of ESA. ESA brings a new work-focus for people receiving it, with 
an emphasis on capability rather than incapacity. So it is important for the wider 
ambitions that HB/CTB is structured for this client group so the wider policy 
objectives are met. 

119. Local authorities have been provided with comprehensive guidance on 
when couples may be better off if they swapped which one of them is the HB/ 
CTB customer and the correct procedures to adopt to allow this to happen. 

The case for a targeted approach to migration 

120. Respondents were keen to recommend that those who were most 
able to work should be targeted for additional support, rather than 
disabled people who would find it difficult to work. Indeed, when 
considering the desire to return to work, evidence shows that the stock 
of incapacity claimants is highly differentiated - including by age, length 
of time on benefits and the degree of health limitation. This provides 
support for a segmentation approach, which would enable limited 
resources to be targeted most effectively. 

121. The WCA is intended to identify more accurately what support is 
appropriate for each customer, if an individual experiences severe functional 
limitation as a result of their health condition or disability, they will be placed in 
the Support Group and not mandated to undertake work-related activity, 
although they can volunteer to do so if they wish. A customer who has limited 
capability for work but can reasonably be expected to undertake work related 
activity will be placed in the Work-Related Activity Group and supported to 
move closer to the labour market. This is why it is essential that all current 
incapacity benefits customers go through the migration process and undertake 
the WCA. The Review of the Pathways to Work programme will ensure that the 
support needed for customers in the Work-Related Activity Group is in place 
prior to migration. 

Evaluation 

122. A number of respondents were concerned about the lack of evidence 
to support the policy and did not believe that it would be sensible to 
implement the policy for existing incapacity benefit customers without 
the evidence base to show it will be able to fulfil its aims. Respondents 
were also keen that DWP commissions research to follow up claimants 
who fail the WCA, including those who are not eligible for JSA(IB) or 
JSA(C) (and therefore flow off benefit entirely). 

123. The Government believes that ESA is the right benefit and that this is the 
right time for increasing the support to help these customers into work. ESA is 
meeting its aims of placing people on the right benefit with support to return to 
work and providing more support to the most severely disabled. In August 2009 



23 



there were 374,000 people in receipt of ESA. Of new claims from March to May 
2009, 5 per cent of people have been assessed as suitable for the Support 
Group, 12 per cent assessed as suitable for the Work-Related Activity Group 
and 38 per cent have been assessed as fit for work. 1 

124. The Government understands the concerns of the Committee and others 
about the limited evidence from the implementation of the current ESA regime. 
It is true that it is still relatively early days and ESA has only just reached a 
steady state for some parts of its implementation. Consequently evaluation is 
in its early stages. However, to delay the migration of customers on other 
incapacity benefits would not be right. ESA is a very different regime that will 
provide help and support that some of these customers have been denied for 
many years. The Department has commissioned a programme of research to 
evaluate ESA and reports of this research will be published in due course. 

125. The following questions will be addressed in the evaluation: 

• Is ESA fulfilling its main objective of providing a gateway to work, for 
those who are able to do so? 

• Is ESA being delivered effectively and efficiently, and what improvements 
might be made? 

• What are customers' experiences of ESA and are claims being handled 
quickly and sensitively? 

• Are staff being provided with the support and resources they need to 
deliver an effective service? 

126. The evaluation covers all customers making a new claim for ESA, as well 
as the various types of staff dealing with ESA- Jobcentre Plus Contact Centre 
and Benefit Delivery Centre staff, Jobcentre Plus and Pathways Provider 
advisers, medical professionals who assess customers, and intermediaries 
such as welfare rights and adult social services workers. Plans are currently 
being developing to evaluate the migration of existing incapacity benefits to 
ESA from October 2010. 

127. The first evaluation report, of qualitative research examining staff and 
customer views and experiences of early ESA implementation in May-July 
2009, was published in the DWP research report series on 2 March 201 2 . 
Fieldwork for a large-scale representative survey of people's experiences and 
views of claiming ESA was concluded in February 2010, with a report of this 
expected to be published in the DWP research report series in Summer 2010. 



1 The remaining 45 per cent are split between those cases that were still in progress and 
those cases that withdrew the claim before reaching the WCA. Please refer to official 
statistics publications on the WCA: http://research.dwp.gov.uk/asd/workingage/esa_wca/ 
esa_wca_1 901 201 0.pdf 

2 DWP research report 631: Employment and Support Allowance: early implementation 
experiences of customers and staff available on the DWP website at http://research.dwp.gov.uk/ 
asd/asd5/rports2009-201 0/rrep631 .pdf 



24 



128. The Department plans to re-survey respondents on their ongoing 
experiences of ESA, or their subsequent activities if they have left the benefit, 
later this year. This follow-up will include people who were found fit for work at 
the WCA, and the Department are currently considering how it might look at the 
outcomes of this group in more detail. 

129. In addition, further qualitative research on customer and staff views of the 
WCA and WFHRAis currently underway, with publication expected before the 
start of migration in October 2010. An in-depth exploration of customer, staff 
and intermediary experiences of the whole ESA process is also planned, later 
in 2010. 

130. These evaluations will be used to help inform the migration process and 
to improve the service given to ESA customers generally. 

The Committee's Conclusions 

131 . The Committee welcomes the Government's continuing commitment 
to supporting incapacity benefits claimants into work and endorses the 
Government's aim of ensuring that the right people are on the right benefit 
with the right level of support and conditionality. It also welcomes 
proposed migration arrangements that are supported by transitional 
protection that seeks to minimise the immediate impacts of change. 

132. However, the Committee believes that the migration arrangements 
that these proposed regulations would introduce cannot be implemented 
without the risk of operational stress and adverse impacts on significant 
numbers of vulnerable people. In its view, the Department should not 
embark upon the proposed migration until the well-documented problems 
with current ESA processes and procedures (including those with the 
WCA) have been resolved, any changes to the Pathways programme have 
been implemented and bedded-in, and improvements have been made to 
the support available for JSA claimants with a health condition or disability. 

133. The Government recognises the Committee's concerns but believes for 
the reasons set out in this response, that it is addressing the specific issues 
raised and feels it would not be right to delay migration, denying customers the 
support they would receive on ESA to return to work. 

134. It is of particular concern to the Committee that the Department is 
moving ahead with the migration of existing claimants of incapacity benefits 
without a solid evidence base for either the decision to migrate or the 
proposed migration arrangements. The Committee notes that the evaluation 
of ESA for new claimants is not planned to be completed until 2011, by 
which time the proposed migration arrangements will have commenced. 

135. The Committee believes that the Department has underestimated 
the support required by this vulnerable group of claimants, in terms of 
both their participation in a more active benefit regime and the support 
required to move them closer to the labour market. With the Pathways 
model, as currently delivered and targeted, having been found to be 



25 



largely ineffective, and no alternative yet proposed, the Committee is 
concerned that the migration will neither be informed by evidence of how 
ESA is working for new claimants, nor supported by the sorts of services 
and programmes that these claimants will need if they are to comply with 
more demanding benefits conditionality. 

1 36. While it is true that evaluation of ESA is in its early stages the Government 
believes that this is still the right time to begin the migration of customers on 
older incapacity benefits to the new ESA regime, especially as it would be 
unfair to leave these customers behind as the labour market strengthens. The 
Department is continuously learning lessons from current operation of ESA and 
is taking these into consideration in the development of the migration process. 
Customer segmentation work has been commissioned to enable us to address 
the specific needs of different customer groups and the Department is also 
consulting with external customer representative groups in order to take account 
of their views in the design of the customer journey. Recommendations from 
the Pathways review will be implemented in time for the first customers coming 
through the migration process. 

137. In respect of the proposed transitional arrangements, the Committee 
welcomes the number of protections that the Department has incorporated 
but it does not feel that these go far enough, particularly the transitional 
protection of tax liability and tax credits, and it strongly suggests that the 
Department seeks to make arrangements that will ensure that there are 
no cash losers at the point of change. 

138. As addressed in paragraph 6, the Government takes the Committee's 
concerns very seriously and are considering this matter further with the 
Committee's recommendations in mind. 

Recommendations 

139. The Committee recommends that the migration to ESA does not 
proceed to the current timetable but waits until: 

• a stronger evidence base on what works and whether ESA is 
achieving its aims is available 

• the new regime for claimants with a health condition or disability 
(as an outcome of the Pathways review) has bedded down 

• DWP's review of the WCA is complete, recommendations have 
been considered and any necessary changes have been made 

• demand-side approaches to stimulating the labour market have 
begun to have a positive impact on local demand for labour, 
particularly in areas with a high concentration of IB claimants. 

140. If the migration does proceed as planned the Committee recommends 
that all of the following conditions must be met: 



26 



(i) The trial of the conversion process (due to start in October 
2010) should be extended to six months. This would allow for a fuller 
test of conversion and would also allow more time for improvements 
to be made to ESA processes and procedures before migration is 
rolled out nationally. The results of the trial should fully inform 
both the processes and timetable for national roll-out. 

(ii) Tax liability and tax credit transitional protection for long-term 
incapacity benefits claimants (pre-April 1995) should be carried 
forward into the ESA regime. 

(iii) Improvements must have been implemented to the ESA regime, 
including: improvements in the speed of processing appeals and 
in the support provided to claimants who are appealing; enhancing 
the quality of the WCA, particularly for claimants with mental 
health problems and cognitive and leaning disabilities; and 
ensuring that enhanced employment support is in place for 
claimants with a health condition/disability at all stages of the 
claims process and across the benefit regimes. 

(iv) A comprehensive customer information strategy must be in place, 
allowing complete and accurate information to be very clearly 
communicated to customers, intermediaries and Jobcentre Plus/ 
HMRC staff. Lessons learned from failures in the communication 
strategy for ESA for new claims should be incorporated. 

(v) Resources must be deployed more effectively by segmenting the 
customer group and targeting mandatory support on those closest 
to the labour market. Migration within the proposed timescale 
could also be managed more effectively by retaining claimants 
who are near to State Pension Age (SPA) (but not yet reaching 
SPA during the conversion phase) on incapacity benefits. Support 
for those not migrated could be offered on a voluntary basis. 

(vi) Incapacity benefits claimants currently exempt from the PCA 
should be automatically treated as meeting the conditions for the 
ESA Support Group. Claimants who fall within Regulation 10 of 
the Social Security (Incapacity for Work) (General) regulations 
1995 should also be placed within the support group. 

(vii) A full programme of evaluation should be put in place, to include 
claimants who are found fit for work, and the details of the programme 
should be shared with SSAC before the evaluation commences. 

141. The Government has carefully considered the Committee's concerns in 
relation to the ESA transitional Regulations and their wider concerns about the 
migration programme. However, for the reasons outlined in this response it does 
not accept the Committee's recommendation that migration should not continue 
to the current timetable. The Government considers the migration of existing 
incapacity benefits customers to ESA to be a key element of welfare reform and 
one that will greatly benefit customers at a time when support to get back to 



27 



work is urgently needed. The Government does not believe it would be right or fair 
to delay this support for customers who have been without it for too long already 

142. The Government is grateful for the Committee's other recommendations 
and hopes that the proceeding response will reassure the Committee on a 
number of points. The Government agrees with the Committee that a 
comprehensive customer information strategy is essential and the Department 
is working closely with external stakeholders to ensure that this is in place. 
Significant customer segmentation work is ongoing that will facilitate this. 
Moreover the work it is undertaking to segment the caseload will provide 
valuable information which will be used to help the Department more successfully 
engage with customers, some of whom will have had very little contact for a 
number of years. The Department will be continuously monitoring the migration 
process and any emerging evidence elsewhere to see if further improvements 
can be introduced. 

143. As mentioned above, the Government acknowledges the Committee's 
concerns about the proposed changes to the tax status of some customers in 
relation to both income tax liability and the effects on tax credits. As a result of 
these concerns, the Government is reviewing the position of these customers. 
The Government is putting in place a comprehensive evaluation of the ESA 
regime and is currently developing plans to evaluate the migration from existing 
incapacity benefits. 

144. The Government recently published its spring command paper Building 
bridges to work: new approaches to tackling long term worklessness which 
sets out what support will be available for customers moving to the more work- 
focused regime of ESA and to JSA. The command paper sets out plans to 
provide a more personalised conditionality regime coupled to a more flexible 
support package for ESA customers. It also looks at extra health-related support 
for people who are found fit for work, with a particular focus on additional 
support for people who will be moving from incapacity benefits to JSA and it 
sets out plans for people on ESA who reach two years on the benefit, and who 
want one, to be provided with a guaranteed Work Choice place. 

Conclusion 

145. The Government is grateful to the Committee and the interested parties 
who responded to the consultation exercise, for their consideration of the draft 
Regulations and for their comments on them. The Government has considered 
these carefully in reaching its decision to continue with the migration from 
previous incapacity benefits and will continue to engage with stakeholders as 
the migration proceeds. 

146. The Employment and Support Allowance (Transitional Provisions, Housing 
Benefit and Council Tax Benefit) (Existing Awards) Regulations 2010 are now 
laid before Parliament. This instrument amalgamates The Employment and 
Support Allowance (Transitional Provisions) (Existing Awards) Regulations 
2010 and The Housing Benefit and Council Tax Benefit) (Employment and 
Support Allowance) (Amendment) Regulations 2010, which were previously 
referred to the Social Security Advisory Committee as separate instruments. 



28 



From the Chairman 

The Rt Hon Yvette Cooper MP 

Secretary of State for Work and Pensions 

Caxton House 

London SW1H9DA 

15 March 2010 

Dear Secretary of State, 

REPORT OF THE SOCIAL SECURITY ADVISORY COMMITTEE MADE UNDER 
SECTION 174(2) OF THE SOCIAL SECURITY ADMINISTRATION ACT 1992 
ON THE EMPLOYMENT AND SUPPORT ALLOWANCE (TRANSITIONAL 
PROVISIONS) (EXISTING AWARDS) REGULATIONS 2010 AND THE 
HOUSING BENEFIT AND COUNCIL TAX BENEFIT (EMPLOYMENT AND 
SUPPORT ALLOWANCE) AMENDMENT REGULATIONS 2010 

1. Background 

1.1 At the Committee's meeting on 6 January 2010, officials from the 
Department for Work and Pensions presented proposals for our consideration 
relating to the Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010 and the Housing Benefit and Council Tax 
Benefit (Employment and Support Allowance) Regulations 2010. A detailed 
Explanatory Memorandum (EM) of the Department's position accompanied 
these proposed draft regulations (Appendix 3). 

1 .2 Following discussions with officials, we decided to take these regulations 
on 'formal referral' for the preparation of this report. On 11 January we published a 
press release inviting comments on the proposals to reach us by 8 February 2010. 

1.3 We received 18 responses. Details of the organisations and individuals 
who responded are at Appendix 2. We are grateful to those who responded and 
to officials of the Department for Work and Pensions for their assistance. 

2. The Proposals 

2.1 The Secretary of State for Work and Pensions proposes that from October 
2010 the Department will begin the conversion of existing awards of incapacity 
benefits 1 (together with awards to customers of national insurance credits-only 
on the grounds of incapacity) to Employment and Support Allowance (ESA). 
The conversion process will be tested on a small number of cases, with national 
conversion planned to start with the referral of customers to Work Capability 
Assessments from February 2011 and to be completed by the end of March 
2014. Almost 1.5 million customers are expected to go through the conversion 
process (around 10,000 cases weekly over 3 years). 



1 All existing incapacity benefits (Incapacity Benefit, Income Support on the grounds of 
disability and Severe Disablement Allowance) 



29 



2.2 The Regulations detail the grounds upon which, and the circumstances 
in which: 

• an existing incapacity benefits award will be converted to an award of 
ESA and the amount of any such award 

• an additional allowance (a "transitional addition") may be awarded to 
customers, in appropriate cases, to protect the rate of incapacity benefits 
paid to them at the point of conversion on a mark-time basis 

• the value of such a transitional addition may be eroded, terminated, and 
resurrected, as appropriate. 

The regulations also detail the decision-making required to effect conversion. 

2.3 The Regulations are designed to facilitate as smooth a move as possible 
from incapacity benefits to ESA, and to protect a customer's overall benefit income 
at the point of transfer by ensuring that no-one who qualifies for conversion to 
ESA sees a cash reduction in their benefit at the point of conversion. 

2.4 The Regulations also propose consequential amendments to Housing 
Benefit and Council Tax Benefit provisions, to ensure that no one sees a cash 
reduction in their benefit. 

3. Summary of the Department's Position 

3.1 The Government's aim is to see one million fewer people on incapacity 
benefits and ESA by 2015, and believes that it is right to ensure that, where 
appropriate, people are moved closer to the labour market, either through 
looking for work or preparing for a return to work. 

3.2 At the same time, the Government wishes to ensure that the right people 
are on the right benefit with the right level of support and conditionality; and it 
wants to ensure that all disabled people and people with health conditions in 
similar situations are on the same benefit and are treated equally over time. 
The conversion of customers from existing incapacity benefits onto ESA, to 
which the Government committed itself in the White Paper 'Raising Expectations 
and Increasing Support' published in December 2008, is an integral part of 
achieving these objectives. 

3.3 ESA is a more pro-active, work-focused benefit than the incapacity 
benefits it is replacing. It is designed to ensure that people receive the support 
they need to take up or prepare for work, where appropriate. This supports 
Departmental Strategic Objective 2, to "maximise employment opportunity for 
all". 

3.4 The Department's position is summarised in more detail in the Explanatory 
Memorandum attached at Appendix 3. 



30 



4. The Committee's View 
Introduction 

4.1 We considered the Department's proposals at our regular business 
meeting on 6 January 2010 and identified a number of overarching concerns 
with the proposals: 

• Firstly, although we have been told that you are committed to maintaining 
cash benefit levels, we are concerned that the impact of the changes on 
tax liability and on tax credits may mean that some claimants are 
significantly worse off on ESA than on their previous benefit 

• Secondly, given the breadth and depth of issues that claimants of long- 
term incapacity benefits will present to the migration process, we feel 
that the trial of the conversion process will be too limited, both in scope 
and time, to allow for robust evaluation - particularly given the complexity 
of the situation posed by migration 

• Thirdly, we were concerned that, despite the transitional arrangements, 
some claimants may lose access to passported benefits when they 
transfer to ESA. We raised this issue with DWP officials and they have 
corrected the draft regulations accordingly 

• We are concerned about the capacity of both Jobcentre Plus and the 
associated medical services to migrate the large number of claimants 
over a relatively short period of time, and about their ability to deliver an 
effective service to claimants 

• Finally, we are concerned also about the stiffer test that the WCA poses 
and the outcome for those claimants who, having been found unfit for 
work under the incapacity benefits regime, are newly assessed as being 
'fit-for-work'. 

4.2 Given that ESA is now a key element of the welfare to work system, we 
understand the rationale for phasing out the alternative incapacity benefits 
regimes. We accept that this will reduce the complexity associated with having 
two different benefits and two different assessment regimes. However, we also 
note that transitional protection introduces additional complexities, including 
the provision of transitional protection for extant transitional protection 
(protection that, in our view, would have been better bought out). 

4.3 In light of the large volume of customers to be migrated a transitional 
protection approach is the most sensible and we are pleased to see that officials 
have taken into consideration SSAC's published guidelines on the use of 
transitional protection (SSAC 12th Annual Report, May 1997 - March 1999). 
This protection needs to cushion the transition for those who are affected, break 
the linking period, and deal with the knock-on effects for other benefits. We 
believe that the proposed regulations go some way towards achieving this aim. 
For example, we welcome the continuing disregard of income from occupational 
and private pensions for certain claimants. However, we have substantial 



31 



concerns about potential losers in the system - customers for whom a reduction 
in income is driven solely by their migration from incapacity benefits. 

4.4 Under the terms of our remit we may consider proposals in the form of 
draft regulations or otherwise. The Committee and many of our stakeholders 
are deeply concerned about the actual intention to migrate stock clients from 
incapacity benefits to ESA, regardless of the protections as detailed in the 
regulations. In this report we intend, therefore, to comment both on the 
regulations which are designed to achieve transition and on the wider 
implications of transition itself. Whilst we support the Department's welfare to 
work ambitions generally, we are not convinced that the proposed migration will 
achieve the Government's aims for claimants who are incapable of work long- 
term. We set out our concerns in more detail below. 

The impact of migration on tax iiabiiity and tax credits 

4.5 As stated in the Explanatory Memorandum (para 9.2), Ministers have 
committed on several occasions to ensuring that no existing claimants of 
incapacity benefits will see a cash reduction in their benefit on conversion to 
ESA. Nevertheless, the Committee is concerned that the impact of the proposed 
changes on tax liability and on tax credits may mean that some claimants are 
significantly worse off financially on ESA than on their previous benefit 2 . DWP 
officials estimate that approximately a quarter of a million claimants are currently 
on tax-free incapacity benefits, although not all of these will be migrated to 
ESA: those who reach State Pension Age during the migration period, for 
example, will be excluded. 

4.6 The particular group we are concerned about are those who have claimed 
incapacity benefits since before April 1995 and who are likely to be some of the 
least able to cope with migration, having already moved from the previous 
incapacity regime (Invalidity Benefit or Sickness Benefit). These claimants 
were afforded tax protection on the element of their income from Invalidity 
Benefit/Sickness Benefit when they were migrated to IB and their payments 
have been free of tax throughout their claim. However, as stated in the 
Explanatory Memorandum (para 6.16), the Department's current plan is that 
this protection will be lost on migration to ESA. This point is quantified in the 
Explanatory Memorandum (EM): 

6.17 We estimate that up to 3% (or 50,000) customers could have an 
increased tax liability. Customers would not lose any benefit as a result, as 
on conversion benefit levels would be protected. However, they would have 
to pay on average an estimated £1,000 a year in income tax. These will be 
customers with the highest incomes, the vast majority of whom are already 
liable for tax and have other sources of income that take them over the 
£6,475 income tax threshold. 

4.7 We are concerned that a full analysis of income levels was not included in 
the EM and that assumptions may be being made about a significant minority 



2 Although we also note that HB and CTB entitlement may increase, and therefore mitigate 
some of the loss in income associated with changes in tax liability and tax credits. 



32 



of claimants. Anecdotal evidence suggests that some people in this claimant 
group have severe disabilities and would struggle to cope with a reduction of 
this level in their income. 

4.8 We have already raised the issue of taxation and tax credits with DWP 
officials. Officials have made clear that the proposed regulations do not provide 
specifically for taxation; the effect of these regulations is that unless changes 
are made by HMRC, customers will become subject to the normal ESA rules 
(which include tax liability on benefit). In correspondence, officials have pointed 
out that taxation of benefit is a matter for the Chancellor of the Exchequer and 
they understand that no decision has yet been taken in relation to claimants 
who will be migrated to ESA, but that DWP's recommendation is that these 
customers become liable to taxation of benefit. 

4.9 The group referred to above also have their income from IB exempt for 
tax credit purposes. Transferring these claimants to contributory Employment 
and Support Allowance (ESA(C)) will convert the amounts received from benefit 
into income for tax credits purposes. Adding say a further £5,000 to household 
income for Working Tax Credit (WTC)/Child Tax Credit (CTC) may make a very 
significant difference to tax credit payments, regardless of the income tax 
position. We would like to know what analysis DWP has carried out with regard 
to the effects of these changes for tax credit purposes. 

4.10 We will also be seeking information on how the Department proposes to 
prepare those affected for these potential losses, should the proposals be 
implemented as they stand. Any communication strategy will have to be geared 
to reflect the needs of the different segments of the customer base, who must 
be provided with different messages in relation to taxation. 

4.11 We are concerned about the operational implications with regard to tax 
and tax credits, and the inequities that will arise, in connection with a phased 
migration. Claimants who are converted early in the process (particularly those 
in the pilot phase) will potentially face reductions in income several years before 
other claimants. Some claimants will be penalised financially, therefore, by 
inclusion in the trial. 

Trial of the conversion process 

4.12 We very much welcome a trial of the conversion process, as we anticipate 
that the migration of existing incapacity benefits claimants will raise broader 
and deeper issues than the introduction of ESA for new claimants. However, 
we are not convinced that the trial, as current planned, will allow for robust 
evaluation. It is essential that the opportunity for learning is maximised prior to 
national roll-out, in order to minimise any negative impacts on claimants, 
intermediaries and Jobcentre Plus. We feel that the trial period should be 
extended to at least six months, allowing more time before national roll-out. 
This would allow more time both for a fuller evaluation and for existing problems 
with ESA to be addressed. We are concerned that the clerical nature of the test 
will not provide a true test of the migration process and we would welcome 
more detail about the scope of the trial, including locations and the numbers of 



33 



claimants. We also recommend that the trial should consider what level of 
support local authorities need to administer the changes and what the impacts 
of reduced funding (across local authorities and Jobcentre Plus) could be for 
timescales and the quality of implementation. 

Winners, losers and complexity 

4.13 By any measure, these proposals are highly complex and our concerns 
about the apparently arbitrary outcomes of the application of the proposed 
regulations in a number of possible real-life scenarios led us to put together 
some illustrative examples. As we have noted above, as the proposals stand 
there will be losers at the point of change (and some gainers, as well). We 
found it both challenging and time consuming to work through the examples set 
out at Appendix 1, and even after detailed consideration of all the elements 
involved we cannot be certain that the calculations are accurate. Nonetheless, 
they demonstrate why we have questioned the rationale for a transition that 
may leave some IB claimants significantly worse off simply because their claims 
date from before 1995. 

4.14 The migration from incapacity benefits to ESAis also likely to entail many 
claimants with existing child allowances and premiums being transferred to an 
award of Child Tax Credit (CTC) at the same time. This will lead to some 
claimants becoming worse off because of this change, even though the transfer 
to ESA does not of itself lead to a loss of income. It will be particularly difficult 
for claimants to understand that they have been awarded transitional protection 
for ESA yet are also worse off than on their previous benefits. An illustration of 
this effect is included in Appendix 1 as example 4. We recommend that the 
Department examine how claims which involve this double migration will be 
managed, and in particular, look at how the outcome of these arrangements will 
be communicated to claimants. 

Loss of access to passported entitlements 

4.15 The draft regulations, as presented to us on 6 January, led to further 
concerns that, despite the transitional arrangements, some claimants may lose 
access to passported entitlements when they transfer to ESA. In particular, this 
appeared to affect IS claimants whose entitlement to ESA(IR) would be nil on 
income grounds (i.e. where their income is lower than the IS applicable amount 
but higher than the ESA applicable amount), and who would not qualify for a 
transitional allowance (TA) payment (as the applicable amount is less than 10p). 

4.16 We raised this issue in correspondence with DWP officials, following their 
initial presentation of proposals. Having reflected on our comments, the 
Department accepted that the draft regulations did not deliver the policy intent. 
The intention is that whilst there should be a minimum amount of ESA/TA 
payable, this does not preclude entitlement below this amount. The Department 
has therefore amended the regulations to achieve the policy intent, ensuring 
that the claimants referred to above will still be classed as being in receipt of 
ESA(IR) for the purposes of passported benefits (e.g. Housing Benefit, free 
prescriptions) and with regard to eligibility for wider Jobcentre Plus support 



34 



(e.g. budgeting loans - where the relevant conditions are met). We welcome 
this amendment. 

Jobcentre Plus - capacity issues 

4.17 We have been impressed with the way that Jobcentre Plus has coped 
with the additional demands on its services over the past 12-18 months, arising 
both as a direct result of the recession and with the raft of major policy changes 
that have been implemented within the current economic climate (including 
ESAfor new claimants). However, we do have concerns about the capacity of 
Jobcentre Plus and the medical service contractor to migrate the anticipated 
volume of claimants of incapacity benefits to ESA in the proposed timetable 
and provide an effective service to the client group (discussed in more detail in 
sections 4.19 and 4.20, below). 

4.18 The Explanatory Memorandum (para 27.1) states that steps are being 
taken to increase the medical capacity that is available to undertake the 
necessary medical assessments. We would very much welcome further 
information about these and reassurance on this point. 

4.19 We question whether a three year timetable for migration is feasible in the 
current economic climate and urge the Department to reconsider how best to 
apply limited resources. We have observed on a number of occasions recently 
the demands made of Jobcentre Plus, both in relation to its response to the 
recession, and also more generally in responding to an ongoing programme of 
major policy and ambitious operational change and development. We are 
concerned that Jobcentre Plus resources will be stretched for some considerable 
time to come. Therefore, we would suggest that a more pragmatic use of its 
resources may be called for and that a full migration from incapacity benefits on 
a short timescale may not be the most immediate priority in terms of what the 
required investment can be expected to achieve. 

4.20 As we note in our conclusions (see section 6) we would suggest that if 
these proposals are to go ahead, they should be reviewed to see where the 
programme could be trimmed back, for example, by allowing those close to 
state pension age (but not yet reaching pension age during the migration 
period) to remain on their existing benefit. 

Effective support for claimants 

4.21 There is a wealth of evidence that illustrates that many long-term claimants 
of incapacity benefits have multiple barriers to active participation in the labour 
market and will therefore require intensive support (e.g. Beatty et al, 2010). We 
are not convinced that the required level of personalised, flexible support will 
be available for all migrated clients, particularly in areas with a high IB claimant 
count. Whilst we welcome the Department's current review of the main support 
programme - Pathways to Work - we are concerned that the roll-out of ESA for 
existing claimants will be well advanced before a revised Pathways model is 
implemented nationally. As our respondents have suggested, and we have 
observed in the course of our visits to Pathways offices and programmes, the 
stock of incapacity benefits claimants contains significant numbers of the most 



35 



vulnerable long-term benefit claimants. As we note above, in addition to their 
health conditions and disabilities, they are likely to present complex and multiple 
problems and barriers to employment. Without an established, fully-functioning 
support programme in place and ready to address the needs of this group, 
there is a risk that there will be no suitable services to offer these claimants. 

4.22 We are also concerned about the level of support that will be available for, 
what we anticipate, will be a significant minority of the client group who will 
move to a much more active benefit (JSA). We welcome DWP's proposal, as 
part of the Pathways review, for making improvements to the support provided 
to JSA customers with a health condition or disability (particularly those 
customers who have been disqualified from entitlement to ESA following the 
WCA), but we have concerns about the timing for implementation; many 
customers will have moved from incapacity benefits onto JSA before the revised 
model is implemented. 

Administrative issues 

4.23 Evidence and anecdote both highlight valid concerns about the current 
administration of ESA, particularly with regard to the Work Capability Assessment 
(WCA) and the appeals process (for example, recent evidence from both 
Macmillan and CAB highlighted the administrative difficulties faced by certain 
groups of claimants) 3 . Whilst we appreciate that lessons have been learned 
from the implementation of ESA for new claimants, existing claimants are a 
very different segment of the customer base and will likely present different and 
deeper challenges. 

4.24 In this context, we have noted a number of worrying trends emerging from 
the administration of the current ESA regime that signal where problems may 
arise. For example, more claimants than anticipated have been found fit for 
work and, consequently, the number of appeal cases has been higher than 
expected. Anecdotal evidence also suggests that in some areas health 
assessments are not being completed within the 13 week assessment phase, 
which has implications for the provision of support services, particularly where 
these have been contracted out of Jobcentre Plus. Official statistics illustrate 
that when completed WCA assessments are considered, 68 per cent of 
claimants were found fit for work and that 34,500 fit for work decisions had 
been appealed by December 2008 (although only 26 per cent of these appeals 
had been heard by the end of November 2009) 4 . We do however appreciate 
that the differences between new and existing claimants are likely to lead to 
lower proportions of existing claimants being assessed as fit for work. We 
understand that the Department estimates that this figure will be 23 per cent, 
but we believe that it is essential that the Department makes contingency plans 
in the event that the actual proportion is significantly more than expected, which 
we think is a very possible scenario. 



3 Macmillan Cancer Support and Citizens Advice (2009) Failed by the system: why the 
Employment and Support Allowance isn't working for people living with cancer Pearlman, 
V. and Royston, S. (2009) CAB Briefing Paper- Limited Capability: CAB evidence on the 
first year of employment and support allowance administration 

4 http://research.dwp.gov.uk/asd/workingage/esa_wca/esa_wca_1 901 201 0.pdf 



36 



Work Capability Assessment - outcomes and impacts on claimants 

4.25 We are concerned about the consequences of the imposition of the Work 
Capability Assessment (WCA) on IB claimants, and in particular what will 
happen to those who fail a test that is intended to be more rigorous than the 
Personal Capability Assessment for IB. Failing the WCA will have an impact 
both on individual claimants and on Jobcentre Plus/providers. It is a matter of 
major concern amongst the welfare community and a main theme of the 
responses to our consultation considered at section 5 below, that the standard 
of assessment is not always good enough, especially for people with mental 
health and cognitive difficulties. A recent report published by DWP indicates 
that this concern is also shared by Jobcentre Plus staff. In particular, advisers 
expressed concern at "the perceived stringency of the WCA", and the 
"unexpectedly severe health problems" of many customers in the activity group. 5 

4.26 The consequences of migration will be difficult for many customers, 
especially those moving to an active work focused regime and onto Jobseeker's 
Allowance (JSA) and, as discussed above, we encourage the Department to 
focus strongly on ensuring that the right support is in place before any migration 
is attempted. Claimants are likely to feel impacts on their health and financially. 
It is therefore important that the Department communicates the proposed 
changes clearly to customers, particularly those who would be financially worse 
off following the proposed migration (those moving to JSA or off benefit). We 
have observed that the Department's communications strategy for the 
introduction of ESA did not achieve the hoped for levels of public awareness 
and understanding (and our respondents have pointed to ESA continuing to be 
poorly understood). The proposed migration poses as great a communications 
challenge, and the Department and its partners and providers will need to find 
more effective ways of getting key messages across to a group that may not 
have access to, or be responsive to, mainstream information channels. 

4.27 We understand that the Work Capability Assessment is currently under 
review, focusing particularly on whether the WCA is accurately identifying 
individuals for the most appropriate support and accounting for adaptation. We 
keenly await the findings and recommendations from the review, which we 
understand are expected later this year. We are disappointed, however, that 
the roll-out of migration to ESA will go ahead before any revisions to the WCA 
will have been implemented. As we have noted above, the uncertainties around 
the future development of ESA do not make for the necessary stable platform 
for the migration of claimants from existing incapacity benefits. 

5. Summary of Responses to the Consultation 

5.1 In response to our consultation respondents focused upon a number of 
key areas of the proposed regulations. As we have done, respondents identified 
transitional issues and questioned the wisdom of the migration per se. 



5 Barnes, H. et al (2010) Employment and Support Allowance: Early implementation 
experiences of customers and staff. DWP RR631 



37 



5.2 Respondents welcomed the transitional protection for claimants migrated 
to ESA (and the associated HB/CTB additions), particularly with regard to 
streamlining the migration process. A number of respondents also welcomed 
the gradual alignment of benefit rates. The treatment of Occupational and 
Private Pensions as detailed in the regulations was also welcomed. One 
respondent welcomed the HB additions, which ensure that changes to income 
will not affect transitional protection, thus avoiding a work disincentive affect. 

5.3 However, many respondents are greatly concerned about the minority of 
claimants who will not have their overall income protected. Respondents are 
also concerned that many vulnerable claimants (particularly those with mental, 
cognitive and learning difficulties) will fail the WCA and be forced onto a JSA 
regime that is unable to support them. Another respondent highlighted the 
negative impact that uncertainty and upheaval can have on the most vulnerable 
customers. This deep concern about the emotional and health impacts of 
migrating long-term recipients of incapacity benefits onto a more active benefit 
(and potentially onto Jobseeker's Allowance or off benefits altogether), informed 
a majority of the responses. 

Implementation and administration 

5.4 A substantial majority of respondents to the consultation questioned the 
wisdom of extending ESA to existing claimants of incapacity benefits at a time 
when problems with the current ESA regime have yet to be ironed out. In 
particular, respondents pointed to evidence regarding administrative problems 
(including the backlog of appeals), specific problems with the WCA, and the 
lack of substantial evidence on the implementation and impact of ESA (including 
evidence commissioned by DWP). Respondents felt that there is a risk that the 
policy will serve mostly to move vulnerable claimants off benefits, rather than to 
help support them into work. Citizens Advice reported that both evidence and 
informal feedback from bureaux staff and clients indicates widespread concern 
about the way ESA is currently operating. Mind (Croydon) highlighted that ESA 
has been particularly problematic with regard to the treatment of claimants with 
mental health issues. 

5.5 A number of respondents share the Committee's concerns about the 
proposed timescale for implementation, fearing that it is unrealistic and will 
have negative impacts on claimants, intermediaries and Jobcentre Plus. Mind 
highlighted that they are keen to receive further details about the trial, particularly 
who will be included in the trial and how and when they will be informed about 
the change. 

5.6 Responses from the welfare rights community, including the Action Group 
and Durham County Council's Welfare Rights Team, highlighted the importance 
of advice agencies in supporting vulnerable claimants. Respondents are 
concerned that the Explanatory Memorandum did not address funding for the 
independent advice sector, which is already dealing with a rise in caseload with 
regard to ESA for new claimants at a time when its funding is being reduced. 
Respondents are concerned about the caseload implications of the proposed 
new regulations, the timetable for conversion and the associated funding 
implications for the advice sector. 



38 



5.7 Respondents suggested a number of refinements to the regulations. For 
example, some (including CPAG and the Action Group), welcomed the fact that 
conversion decisions will not take effect immediately. However, they suggested 
that additional time should be allowed between the effective date and the 
termination of entitlement for cases that will not be migrated to ESA (to allow 
time for alternative benefit claims to be processed). In addition, respondents 
suggested that claimants being uprated by ESA migration should not have their 
benefit uprating delayed by the effective date. Respondents also felt that it 
would be sensible for those appealing to remain on their existing benefit until 
their appeal has been determined. RNIB raised concerns about the permitted 
work rules in ESA. IB/SDA clients who are currently exempt from the PCA can 
carry out permitted work for an unlimited period. However, when these clients 
are migrated to ESA, permitted work for those not in the support group will be 
restricted to 52 weeks. The RN I B suggest that transitional protection is extended 
to support such cases, at the very least to allow those currently in permitted 
work to retain eligibility for the first 52 weeks after migration to ESA. 

Potential losers - tax, tax credits and passported benefits 

5.8 A large number of respondents, including the Low Incomes Tax Reform 
Group (LITRG), raised great concern about the lack of income protection for 
certain claimants of long-term incapacity benefits with regard to tax liability, tax 
credits and passported benefits. We set out our own views on this issue in 
some detail (see paragraphs 4.5-4.11, above). The LITRG were disappointed 
that transitional tax protection had been removed and advised that HMRC and 
DWP should fully explore the impact of the regulations on tax credit claimants. 
They also recommended that ministers should give the same assurances for 
tax credits as for benefits - i.e. that loss of income should not result from 
migration to ESA. LITRG calculate that claimants of non-taxable IB migrating to 
ESA(C) could lose 20% of their benefit through taxation and 39% through 
withdrawal of tax credits, as well as the potential loss of passported benefits. 

5.9 The Law Centre (Northern Ireland) highlighted a separate group of 
potential losers - claimants whose private income exceeds their child allowance. 
This group of claimants will lose entitlement to income-related benefits (except 
Housing Benefit and Council Tax Benefit), which can lead to the loss of 
passported benefits, including free school meals. 

Potential losers - disabled students 

5.10 The Child Poverty Action Group (CPAG) also raised the issue of potential 
losers as a result of migration. They are concerned about losses for disabled 
students on IS who do not receive DLA. Under the proposed regulations such 
claimants will not be able to claim ESA(IR) and will therefore suffer a financial 
loss and loss of support as a result of the proposed regulations. 

Effective customer communications 

5. 1 1 Anumber of respondents highlighted the need for effective communication, 
not only with customers, but also with a wide range of stakeholders, including 
HMRC, disability organisations, welfare rights organisations, and Local Authorities, 



39 



etc. For example, the LITRG raised concerns about how HMRC will deal with 
change of tax status and associated impacts on tax credits, e.g. with regard to 
the erosion of transitional allowances overtime. Draft communication materials 
should be shared with stakeholders, to ensure that the key messages are clearly 
communicated, correct and complete, and the information materials need to 
meet the diverse communication needs of the client group that will be impacted. 

5.12 There is widespread concern that despite ministerial assurances, there 
will be a substantial minority of claimants for whom there will be a drop in 
income as a result of the proposed migration. Respondents concluded that, 
should the regulations be implemented as currently proposed, it is essential 
that any financial impacts are communicated clearly to claimants well in advance of 
the impact and that appropriate advice and support is provided by the Department. 

Support for claimants 

5.13 In line with our own observations, respondents raised concerns generally 
about the support available for claimants who have health conditions and 
disabilities and also, more specifically, for claimants who are not entitled to ESA 
following the WCA. Citizens Advice and Mind, for example, are very concerned 
that large numbers of people with serious illnesses and disabilities are being 
found fit for work and moved further away from the help and support needed to 
move into sustainable work. 

5.14 The RNIB raised particular concerns about IB claimants who were found 
fit for work but who would not be entitled to claim JSA. This would apply to 
claimants whose income (for example from savings or a partner's income) 
exceeded the applicable amounts for JSA(IB). It is unlikely that this group of 
claimants would be entitled to JSA(C), by virtue of the contribution conditions. 
They would therefore be denied the support available through the JSA regime, 
whilst also suffering a financial impact as a result of migration. RNIB suggests 
that additional transitional protection should be introduced, enabling the 
contributions that entitled an individual to claim IB to be treated as entitlement 
to JSA(C). 

5.15 Whilst respondents broadly support government aspirations with regard 
to moving claimants who have been incapable of work back into work, they are 
of the view that the proposals fail to acknowledge the significant adjustments 
(practical, emotional, financial and health related) that migration will entail for 
many of the client group affected. The RNIB felt that the Explanatory 
Memorandum failed to recognise the severe impact that the loss of IB would 
have on claimants and are concerned about the advice and support that will 
be available. 

5.16 Respondents are concerned about a number of practical considerations. 
For example, the Action Group felt that the level of assistance required to 
support the most vulnerable customers through the claim process had been 
underestimated. Vulnerable customers need practical and face-to-face support 
and often encounter difficulties when confronted by the automated telephone 
service or the on-line application processes preferred by Jobcentre Plus. 



40 



5.1 7 A number of respondents also highlighted the support needs of customers 
with mental health and learning difficulties placed on JSA. For example, Citizens 
Advice noted the experience of clients who are not able to cope with the 
practicalities of signing on. The Law Centre (Nl) raised an associated risk of 
non-compliance leading to sanctions being applied to the most vulnerable 
customers. Advice agencies, including Citizens Advice and the Action Group, 
also highlight anecdotal evidence of 'cycling' between ESAand JSA; claimants 
who are disallowed ESA are being advised by Jobcentre Plus that they are too 
ill to work and that they should reapply for ESA, rather than claim JSA. This 
'cycling' potentially leads to financial hardship. 

5.18 The submission from Sheffield Hallam University/The University of 
Dundee drew attention to the body of evidence which illustrates that many 
long-term claimants of incapacity benefits are a significant distance from the 
labour market, requiring in-depth support. The majority of these claimants have 
no formal qualifications, have been out of work for at least 5 years and face 
multiple obstacles to work. The evidence illustrates the need for demand-side, 
as well as supply-side measures to support long-term claimants of incapacity 
benefits into work. 

Work Capacity Assessment 

5.19 The majority of respondents raised serious concerns about the WCA. 
They were concerned both about the quality of the assessments and the ability 
of the WCA to accurately assess the impact of health conditions and disabilities 
on daily life and the ability to work. The WCA is regarded as particularly 
problematic for those with mental health/learning disability and fluctuating 
health conditions. The Action Group, who provide a specialist resource for 
people with learning disabilities, have witnessed first hand the difficulties in 
navigating the benefits system faced by vulnerable claimants, particularly those 
who have failed the WCA. A decline in mental health as a consequence of 
failing the WCA was also flagged as a risk by a number of respondents. 

5.20 A number of respondents, including Mind (Croydon), suggested that the 
Department's original estimate of only 15% of migrated claimants being found 
fit for work is rather optimistic and they are concerned about the likely impact 
on the appeals system. Respondents are also concerned about what the higher 
than anticipated numbers found fit for work under the current ESA regime might 
mean for the migration of existing claimants. 

5.21 Citizens Advice have called for a more personalised approach to the WCA 
process, taking account for example of age, education and skills. These factors 
can have a fundamental impact on an individual's capacity for work and hence 
on the level of support they require. 

5.22 Mind drew attention to a number of flaws with the WCAand were concerned 
that the volume of claimants to be migrated would only exacerbate these 
existing problems. Case studies and evidence from key stakeholders revealed 
that assessments are sometimes carried out in open, noisy environments, by 
staff with little experience of mental health issues and, sometimes, at very short 



41 



notice. Mind also highlighted the Work and Pensions Select Committee report 
on decision-making and appeals in the benefit system 6 , which reported similar 
concerns about the WCAand the appeals process. 

5.23 Several respondents are concerned that the issue of PCA-exempt 
claimants was not addressed in the regulations. CPAG call for those currently 
exempt from the PCAto be automatically treated as meeting the conditions for 
the ESA Support Group. They also recommend that the ESA regulations should 
provide that anyone who falls within Regulation 10 of the Social Security 
(Incapacity for Work) (General) regulations 1995 (which provides that people 
with severe conditions should be treated as incapable of work) should be placed 
within the support group. 

Appeals 

5.24 Respondents are concerned about the length of time it is taking for appeals 
to be heard and about the financial and associated emotional and health 
impacts of this for claimants. During an appeal against a 'fit-for-work' decision 
claimants will be paid the assessment phase rate of ESA, which can mean 
vulnerable customers facing financial hardship. The Action Group in particular 
were concerned that the delay in hearing appeals will mean that some claimants 
may spend a considerable amount of time on a reduced rate of benefit. Although 
arrears of benefit are backdated after successful appeals, appeals can take 
some time (the Action Group reported a minimum of 6 months in Edinburgh at 
the time of the consultation response). 

5.25 Respondents are also concerned about the lack of support for claimants 
during the appeals process. Durham County Council's Welfare Rights Team 
provides a comprehensive appeals representation service, which has had a 
positive impact of claimants' success rates at appeal (58% in favour of the 
claimant in cases advised on and 69% in favour of the claimants where there is 
active presentation). These figures are much higher than the national figures. 

Treatment of Occupational and Private Pensions 

5.26 Respondents are concerned with the important principle that customers 
should not see a reduction in their overall benefit income solely because of the 
migration process. They therefore welcome the ongoing protection for certain 
customers with regard to occupational and private pension disregards. However, 
they feel that the regulations do not make it clear whether this protection will 
also be afforded to claimants who are currently protected under the linking rule 
(i.e. those who had claimed IB after 6 April 2001 but who could link to a claim 
before 6 April 2001 ). Respondents also felt that protection should be extended 
to recipients of the highest rate of the care component of DLA. 

Claimants living abroad 

5.27 One of the respondents pointed out that the regulations do not clarify the 
position for long-term claimants of incapacity benefits living abroad (permanently 



6 http://www.publications.parliament.uk/pa/cm200910/cmselect/cmworpen/313/313.pdf 



42 



or otherwise). There are implications both for benefit entitlement and for 
entitlement to medical treatment (via the European Healthcare Certificate 
E121) for such claimants. Official statistics show that there are approximately 
10,500 claimants of IB under the "living abroad or unknown" location code. This 
is likely to include claimants who are exempt from the PCAand those who are 
not. We are seeking clarification from the Department of the proposed provisions 
for this group. 

Housing Benefit/Council Tax Benefit 

5.28 Respondents welcome the regulations which provide for transitional 
protection to be extended to HB and CTB. However, one of the respondents 
(the Chartered Institute of Housing (CIH)) was disappointed that the proposed 
regulations do not alleviate the 'better off problem' for couples - where a couple 
can be disadvantaged (by as much as £30 per week) because the 'wrong' 
member of the couple makes the claim for HB/CTB. CIH note that this problem 
was created by the introduction of ESA, and is unique to HB/CTB, but could be 
completely eliminated by further simple amendments to the regulations. 

The case for a targeted approach to migration 

5.29 Respondents are keen to recommend that those who are most able to 
work should be targeted for additional support, and not claimants whose 
disabilities would make migration difficult. Indeed, when considering the desire 
to return to work, evidence shows that existing claimants of incapacity benefits 
are highly differentiated - including by age, length of time on benefits and the 
degree of health limitation. This provides support for a segmentation approach, 
which would enable limited resources to be targeted most effectively. 

Evaluation 

5.30 A number of respondents are concerned about the lack of evidence to 
support the policy and do not believe that it is sensible to implement the policy 
for existing claimants of incapacity benefits without the evidence base to show 
it will be able to fulfil its aims. Respondents are also keen that DWP commissions 
research to follows up claimants who fail the WCA, including those who are not 
eligible for JSA(IB) or JSA(C), and who therefore leave benefit entirely. 

6. The Committee's Conclusions 

6.1 We welcome the Government's continuing commitment to supporting 
incapacity benefits claimants into work and endorse the Government's aim of 
ensuring that the right people are on the right benefit with the right level of 
support and conditionality. We also welcome proposed migration arrangements 
that are supported by transitional protection that seeks to minimise the 
immediate impacts of change. 

6.2 However, we believe that the migration arrangements that these proposed 
regulations would introduce cannot be implemented without the risk of 
operational stress and adverse impacts on significant numbers of vulnerable 
people. In our view, the Department should not embark upon the proposed 



43 



migration until the well-documented problems with current ESA processes and 
procedures (including those with the WCA) have been resolved, any changes 
to the Pathways programme have been implemented and bedded-in, and 
improvements have been made to the support available for JSA claimants with 
a health condition or disability. 

6.3 It is of particular concern to us that the Department is moving ahead with 
the migration of existing claimants of incapacity benefits without a solid evidence 
base for either the decision to migrate or the proposed migration arrangements. 
We note that the evaluation of ESA for new claimants is not planned to be 
completed until 2011, by which time the proposed migration arrangements will 
have commenced. 

6.4 We believe that the Department has underestimated the support required 
by this vulnerable group of claimants, in terms of both their participation in a 
more active benefit regime and the support required to move them closer to the 
labour market. With the Pathways model, as currently delivered and targeted, 
having been found to be largely ineffective, and no alternative yet proposed, we 
are concerned that the migration will neither be informed by evidence of how 
ESA is working for new claimants, nor supported by the sorts of services and 
programmes that these claimants will need if they are to comply with more 
demanding benefits conditionality. 

6.5 In respect of the proposed transitional arrangements, we welcome the 
number of protections that the Department has incorporated but we do not feel 
that these go far enough, particularly the transitional protection of tax liability 
and tax credits, and we strongly suggest that the Department seeks to make 
arrangements that will ensure that there are no cash losers at the point of change. 

7. Recommendations 

7.1 We recommend that the migration to ESA does not proceed to the current 
timetable but waits until: 

• a stronger evidence base on what works and whether ESA is achieving 
its aims is available 

• the new regime for claimants with a health condition or disability (as an 
outcome of the Pathways review) has bedded down 

• DWP's review of the WCA is complete, recommendations have been 
considered and any necessary changes have been made 

• demand-side approaches to stimulating the labour market have begun 
to have a positive impact on local demand for labour, particularly in 
areas with a high concentration of IB claimants. 

7.2 If the migration does proceed as planned we recommend that all of the 
following conditions must be met: 



44 



(i) The trial of the conversion process (due to start in October 2010) should 
be extended to six months. This would allowfor a fuller test of conversion 
and would also allow more time for improvements to be made to ESA 
processes and procedures before migration is rolled out nationally. The 
results of the trial should fully inform both the processes and timetable 
for national roll-out. 

(ii) Tax liability and tax credit transitional protection for long-term incapacity 
benefits claimants (pre-April 1995) should be carried forward into the 
ESA regime. 

(iii) Improvements must have been implemented to the ESA regime, 
including: improvements in the speed of processing appeals and in the 
support provided to claimants who are appealing; enhancing the quality 
of the WCA, particularly for claimants with mental health problems and 
cognitive and leaning disabilities; and ensuring that enhanced 
employment support is in place for claimants with a health condition 
disability at all stages of the claims process and across the benefit regimes. 

(iv) A comprehensive customer information strategy must be in place, 
allowing complete and accurate information to be very clearly 
communicated to customers, intermediaries and Jobcentre Plus/HMRC 
staff. Lessons learned from failures in the communication strategy for 
ESA for new claims should be incorporated. 

(v) Resources must be deployed more effectively by segmenting the 
customer group and targeting mandatory support on those closest to 
the labour market. Migration within the proposed timescale could also 
be managed more effectively by retaining claimants who are near to 
State Pension Age (but not yet reaching SPA during the conversion 
phase) on incapacity benefits. Support for those not migrated could be 
offered on a voluntary basis. 

(vi) Incapacity benefits claimants currently exempt from the PCA should be 
automatically treated as meeting the conditions for the ESA Support 
Group. Claimants who fall within Regulation 10 of the Social Security 
(Incapacity for Work) (General) regulations 1 995 should also be placed 
in the support group. 

(vii) A full programme of evaluation should be put in place, to include 
claimants who are found fit for work, and the details of the programme 
should be shared with SSAC before the evaluation commences. 




A-A_ 



X \ v^< 



45 



Incapacity Benefit 


£91.40 


DLAHRM 


£49.85 


Earnings 


£209.49 


Working tax credit 


£39.12 



APPENDIX 1 

CASE STUDIES 

(1 ) Lennie and Angela have been married for 25 years. Lennie, who is now 61 , 
has been on long term IB with DLA higher rate mobility since January 1995, 
following a severe accident at work. 

Angela works for 30 hours per week for which she is currently paid £13,000 
per year. 

Lennie and Angela's current weekly position 



Net of tax and national insurance 



Total £389.86 

Lennie and Angela's position after transfer to ESA(C) in a full year 

CBESA £96.85 

DLA HRM £49.85 

Earnings £209.49 Net of tax and national insurance 

WTC £1.45 

Total £357.64 

Total loss of weekly income £32.22 

Assumptions are that: 

• Angela's income was higher in the prior tax year when she was full-time 
so that the tax credits award is based on a current year basis 

• Lennie was getting transitional long-term IB which was not taxable. 
Lennie has no other income so that the change from IB to CBESA does 
not change his tax position 

• Lennie's IB is ignored in working out WTC. However, ESA is taken into 
account in working out WTC. 

Lennie and Angela's current weekly position - including housing 



Incapacity Benefit 


£99.40 


DLA HRM 


£49.85 


Earnings 


£209.49 


Working tax credit 


£39.00 


HB 


£18.44 


CTB 


Nil 



Total £416.18 



46 



Lennie and Angela's position after transfer to CBESA in a full year - including housing 

CBESA £99.40 This includes a transitional 

amount of £2.55 

DLA HRM £49.85 

Earnings £209.49 

WTC Nil 

HB £43.79 

CTB £7.71 

Total £410.24 

Total loss of weekly income £5.94 

HB and CTB assumptions -rent of £100/week and council tax of £25/week. 

HB/CTB applicable amount is £202.40 

Income disregard is £20 

Income pre ESA: £327.89 - 202.40 = £1 25.49 x 65% = £81 .56 
HB = £18.44x20% = £25.09 
CTB = Nil 

Income post ESA: £288.89 - 202.40 = £86.49 x 65% = £56.21 
HB = £43.79x20% = £17.29 
CTB = £7.71 

(2) Abdullah has been claiming Incapacity Benefit for five years for chronic low 
back pain, at the weekly rate of £91. 40 (2010/2011 rates). His wife is in full time 
work. Following migration to ESA he is found not to have limited capability for 
work under the Work Capability Assessment and that decision is upheld on 
appeal. He cannot claim either version of Jobseeker's Allowance, as he does 
not have the right contribution record and his wife is in full-time work. He is 
£91 .40 a week worse off following migration and unless he wishes to maintain 
his contribution record has no incentive to engage with Jobcentre Plus. 

(3) Brenda has been claiming Incapacity Benefit (on conversion from Invalidity 
Benefit) since before April 1995 for brain damage from an accident, at the 
weekly rate of £106.40 including transitional Invalidity Allowance. Following 
migration to ESA she is placed in the support group and would receive only 
£96.85, but her benefit is further transitionally-protected by being frozen at 
£106.40 until ESA catches up. She cannot claim a top-up from ESA(IB) as she 
owns a piece of land worth more than £16,000 which was left to her. 

She is doing supported exempt work for 15 hours a week, for which she earns 
£90. Her new benefit is taxable, which the previous one was not. Her new 
taxable income for 2010-11 is £10,212.80 on which she will pay £747.56 a year 
tax. She is thus £14.37 a week worse off following migration (any Disability 
Living Allowance is not affected by the change.) 



47 



Based on 2010/2011 benefit rates the position on IB is as follows: 

Includes a higher rate age addition 

She has too much capital 



Incapacity benefit 
Earnings 
Income support 


£106.40 

£90.00 

Nil 


Annual taxable income 


£4,680.00 


Minus tax 


Nil 


Total income 


£196.40 


Based on 2010/2011 benefit rates, the po; 


Contributory ESA 
Earnings 

Income-related ESA 
Transitional amount 


£96.85 

£90.00 

Nil 

£9.55 


Annual taxable income 


£10,212.80 


Minus tax 


£14.37 


Total income 


£182.03 



Includes a support component 
She has too much capital 



She is worse off by £14.37 a week. 

Calculating the transitional addition (IS to income-related ESA) 

Regulation 10 

Calculate amount A: 
£106.40 

Calculate amount B: 
£65.45 + £31.40 = £96.85 

Transitional addition is A - B = 1 06.40 - 96.85 = £9.55 

Calculate tax: 

PA = £6,475 

20% tax on first £37,000. 

£10,212.80 - 6,475.00 = 3737.80 x 20% = £747.56 divided by 52 = £14.37 

(4) Jim is claiming incapacity benefit (IB) topped up by income support (IS). He 
and his partner June have two school-aged children. He has been claiming IS 
since 2003 so qualifies for allowances and premiums for the children. June 
gets child benefit. She is in part-time work (less than 24 hours a week) and 
takes home £175 a week. They are in owner-occupied accommodation and 
pay council tax of £25 a week. 



48 



Based on 2010/2011 benefit rates the position on IB prior to removal of 
child additions is as follows: 



Incapacity benefit 


£106.40 


Child benefit 


£33.70 


Earnings 


£175.00 


Income support 


£95.04 


Council tax benefit 


£25.00 


Total income 


£435.14 



Includes a higher rate age addition 



They get maximum CTB 



IS 



IS applicable amount 


£102.75 


Couple 




£39.85 


Disability premium 




£115.14 


Child allowance X 2 




£17.40 


Family premium 




£115.00 


Housing costs 




£390.14 




Minus income 


-£295.10 


£20 earnings is disregarded 




£95.04 


IS payable 


Position on IB after removal of child additions is as follows 


Incapacity benefit 


£106.40 


Includes a higher rate age ad 


Child benefit 


£33.70 




Earnings 


£175.00 




Income support 


Nil 




Child tax credit 


£98.67 


This is max CTC 


Council tax benefit 


£8.04 




Total income 

IS 

IS applicable amount 


£421.81 




£102.75 


Couple 




£39.85 


Disability premium 




£115.00 


Housing costs 




£257.60 




Minus income 


-£295.10 


£20 earnings is disregarded 




Nil 


IS payable 



49 



CTB 






CTB applicable amount 


£102.75 
£39.85 

£115.14 
£17.40 

£275.29 


Couple 

Disability premium 
Child allowance X 2 
Family premium 


Income 


£360.07 
- £275.29 
£84.78 x 


20% = £16.96 



CTB 



£25.00 -£16.96 = £8.04 



Based on 2010/2011 benefit rates, the position on conversion will be as follows: 



Contributory ESA 


£91.40 


Includes a work-related 
activity component 


Transitional amount 


£15.00 




Child benefit 


£33.70 




Earnings 


£175.00 




Child tax credit 


£98.67 


This is max CTC 


Income-related ESA 


Nil 




CTB 


£8.04 





Total income 
Income-related ESA 



£421.81 



Applicable amount 


£102.75 


Couple 




£25.95 


Work-related activity component 




£115.00 


Housing costs 




£243.70 




Minus income 


-£155.00 






£88.70 


Income-related ESA 



Contributory ESA = £106.40 

Income related ESA applicable amount exceeds income by £88.70 (or being 
generous by £88.70 + 13.90 if there is a transitional addition) 

£102.60 - £106.40 = Nil. Therefore not entitled to income-related ESA 

CTB 



CTB applicable amount 



£102.75 
£39.85 

£115.14 
£17.40 

£275.29 



Couple 

WRAC plus TA 
Child allowance X 2 
Family premium 



50 



Income £360.07 

- £275.29 

£85.78x20% = £16.96 

CTB £25.00 -£16.96 = £8.04 

Calculating the transitional addition (IB to ESA) 

Regulation 11 

Calculate amount A: 
£106.40 

Calculate amount B: 
£91.40 

Transitional addition is A- B = £15.00 

The assumption is that Jim will retain free school meals for his school age 
children, but will have to apply for health benefits on low income grounds, 
instead of being automatically passported to these benefits. Moreover, Jim and 
family will lose access to Social Fund support. 



51 



APPENDIX 2 

LIST OF RESPONDENTS TO THE CONSULTATION EXERCISE 
(in order of date received) 



Organisations 


1. 


Sheffield Hallam University/University of Dundee 


2. 


Citizens Advice 


3. 


Law Centre Nl 


4. 


Cardiff and Vale Coalition of Disabled People 


5. 


Citizens Advice Bureaux East Dunbartonshire 


6. 


Action Group 


7. 


Low Incomes Tax Reform Group 


8. 


Durham County Council 


9. 


Chartered Institute of Housing 


10. 


Royal National Institute of Blind People 


11. 


Residential Landlords Association 


12. 


Child Poverty Action Group 


13. 


Mind, Croydon 


14. 


Mind 


Individuals 


1. 


Keven Hearn 


2. 


Linda Mercury 


3. 


Dr Firoze Kerawala 


4. 


Sandra La Espuelita 



52 



APPENDIX 3 

EXPLANATORY MEMORANDUM 

Gill Saunders 

Secretary 

Social Security Advisory Committee 

TheAdelphi 

1-11 John Adam Street 

London. 

WC2N 6HT 

18 December 2009 

Dear Gill, 

THE EMPLOYMENT AND SUPPORT ALLOWANCE (TRANSITIONAL 
PROVISIONS) (EXISTING AWARDS) REGULATIONS 2010 

In accordance with section 170 of the Social Security Administration Act 1992, 
I am formally referring the above regulations to the Committee for its 
consideration. 

As you will be aware, the Department introduced Employment and Support 
Allowance (ESA) for new customers with a health condition or disability from 27 
October 2008. At that time there were not resources available to migrate existing 
customers to ESA. 

In the Green Paper 'No one written off: reforming welfare to reward responsibility', 
published in July 2008 (Cm 7363), the Government set out plans to freeze the 
benefit of people on Incapacity Benefit with age additions as part of plans to 
align the rates of benefit with ESA. Following consultation, the Government 
explained in the White Paper 'Raising expectations and increasing support' 
(Cm 7506), published in December last year, that it intended to align the rates 
more slowly and continue to provide increases equivalent to half the normal 
uprating. This was explained in more detail in Trevor Pendergast's letter to the 
Committee of 16 January 2009, which concerned the Employment and Support 
Allowance (Up-rating Modification) (Transitional) Regulations 2008. The 
modification for these customers came into effect from April 2009. 

In the White Paper it was also announced that the Government intended to 
migrate people on existing incapacity benefits (Incapacity Benefit (IB), Severe 
Disablement Allowance (SDA) and Income Support on disability grounds) and 
transfer them to ESA from 2010-2013. It has now been decided that migration 
will start gradually from October 2010, with full national implementation from 
February 2011, with a planned completion date by the end of March 2014. 

It is intended to convert customers to ESA in the following order: 

• Small trial to test that the migration process works from October 2010. 

• IB and IS customers from February 2011 onwards. 



53 



• SDA customers (once IB and IS claims have been completed). 

Customers who receive National Insurance credits only (people who receive 
neither IB nor IS but are incapable of work) will be transferred to ESA "credits 
only" after the end of the planned conversion period. Conversion for these 
customers may impact on the rates of HB and CTB they receive but they are 
not required to engage with support to help them return to work. 

We are taking a number of steps which I believe will make it easier for people 
to move to ESA and for Jobcentre Plus to administer the scheme. These include: 

• No claims will be required for migration to ESA. The process will be 
triggered by a notice to the customer. 

• The date of a customer's re-assessment will be based on the review 
date of their Personal Capability Assessment. The Regulations provide 
that a Work Capability Assessment will be completed once a notice has 
been issued, to determine eligibility for ESA. 

• People who reach State Pension Age during the migration period 2010- 
2013/14 will not be migrated to avoid having to change benefits twice in 
a short period. 

• Where possible, we will use existing data held for IB/IS to determine 
entitlement to ESA. 

• Claimants who are eligible for ESA will, on conversion, be able to benefit 
from, and become subject to, ESA rules (e.g. permitted work rules, 
sanctions). 

• We will bring forward IB rules on occupational/personal pensions into 
ESA on conversion to protect the income of those who otherwise would 
see a fall in their benefit. 

• Decisions on ESA entitlement will take effect from a "safe date" (referred 
to in the Regulations as the "effective date") which will fall between two 
and four weeks after the date of determination, rather than from the day 
of determination itself, so that claimants can adapt to their new 
circumstances and continuity of payment can be maintained. 

• Existing incapacity benefits will continue to be paid to the day before the 
effective date. 

• Where people who are eligible for ESA receive more on existing 
incapacity benefits than the appropriate ESA rate, their existing rate of 
benefit will be frozen (transitionally protected) at the point of conversion 
and eroded by annual uprating. The regulations also provide details of 
how transitional additions will end on a change of circumstance. 

• Transitional protection will not extend beyond April 2020. 



54 



• Where people who are eligible for ESA receive less on incapacity 
benefits than the appropriate ESA rate, their benefit will immediately be 
increased to the ESA rate on conversion. 

• We will transfer income-related child allowances paid with IS to Child 
Tax Credit before customers are migrated to ESA. We will use a similar 
process to that used for lone parents. 

• All claims to incapacity benefits after 31 January 2011 will be treated 
as new ESA claims. There will be no link to earlier claims for 
incapacity benefits. 

• Change to housing costs, for example mortgage interest, will not affect 
the transitional addition payable with ESA. 

• Appeals may be brought against the decision not to award ESA as a 
result of failure to meet WCA threshold. 

• ESA will be paid at the same rate as for new ESA claims where a person 
is appealing against a decision that they are not entitled because of not 
meeting the WCA threshold. 

• Claimants who are eligible for ESA will, on conversion, be taxed in the 
same way as existing claimants on ESA. 

• We are also taking steps to amend HB/CTB to ensure that no one 
sees a reduction in their overall benefit income solely because of the 
migration process. 

• We are doing all we can to ensure that Jobcentre Plus will provide local 
authorities with the necessary information to enable them to adjust HB/ 
CTB as seamlessly as possible. 

In order to underpin the introduction of ESA and make sure that back to work 
help was available to everyone receiving ESAand incapacity benefits, Pathways 
to Work was rolled out nationwide last year. Customers who are migrated to the 
ESA work-related activity group will be given support to start preparing for a 
return to work. In return, customers are expected to engage with the system, 
and to plan their journey back to work, working with a Personal Adviser. With 
the publication on 13th October 2009 of the first statistics on the operation of 
the new medical assessment for Employment and Support Allowance, the 
Secretary of State announced a review of how Pathways was working. The roll 
out of the new assessment, and the fact that research published in October 
2009 showed no employment impact when Pathways was extended to further 
Jobcentre Plus areas in 2006, means that we believe it is time to look at ways 
to improve and adapt the Pathways programme to ensure that incapacity 
benefits and ESA claimants get more effective help to get into work and manage 
their condition. 

The underpinning principles of our future reforms of the Pathways to Work 
programme are included in the White Paper "Building Britain's Recovery: 



55 



Achieving Full Employment" which was published on 15 December. These 
principles put an emphasis on clarity of process and customer journey; flexibility 
and tailoring of support to the needs of the individual; the importance of placing 
rights and responsibilities at the heart of the relationship between customer 
and personal adviser; and, value for money. We have already taken some 
practical steps to improve performance and use resources better. For example, 
in many places, Jobcentre Plus advisers now conduct the first work focused 
interviews (WFIs) on providers' premises and group sessions are preceding 
individual WFIs. Ministers are considering a range of further proposals including 
some procedural changes around for example flexibility and timing of work- 
focused interviews. We will be working over the coming months with interested 
stakeholders to develop more of the detail and will publish full proposals in the 
spring. Officials working on the Pathways review would be pleased to meet with 
Committee members to explain progress and thinking and to hear members' 
views. This could either be attendance at full Committee if your future work 
programme allows, or at a specially convened event for those who would be 
interested in participating. 

At Appendix 1, I attach an Explanatory Memorandum which explains the 
purpose and effects of the Regulations, which I hope the Committee will find 
helpful. This also includes an impact assessment at Annex A. I have included a 
copy of the draft regulations for ESA at Appendix 2, the draft regulations for HB/ 
CTB at Appendix 3, at Appendix 4 is an explanation of the ESA Regulations and 
at Appendix 5 an explanation of the HB/CTB Regulations. 

Whilst the ESA and HB/CTB amendments are presented as separate draft 
statutory instruments, we intend to combine them for the final package. 

I hope this will aid Committee members in their consideration of this change. 

Yours sincerely, 



Cath Hamp 

Head of Employment and Support Division 



56 



APPENDIX 1 



EXPLANATORY MEMORANDUM TO THE SOCIAL SECURITY 
ADVISORY COMMITTEE 



The Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010 



Contents 

Part 1 Changes to ESA 

1 . Overview 

2. Rationale for proposed regulations 

3. Background 

4. Timing 

5. Order 

6. The Conversion Phase 

7. Back to Work Support 

8. Treatment of Occupational and Private Pensions 

9. Transitional addition 

10. Erosion of the transitional addition 

11. Suspension of transitional addition: linking Rules 

12. Appeals 

13. Compliance with the conversion process 

Part 2 Changes to Housing Benefit and Council Tax Benefit 

14. Regulations that would be amended 

15. Background - structure of ESA and interaction with HB/CTB 

16. The effects of conversion on HB/CTB 

17. Proposed HB/CTB amendments 

18. The amount of the transitional addition 

19. The effective date of the conversion change 

20. Other changes of circumstances effective on the same day as conversion 

21 . Conversion coincides with the annual uprating of social security benefits 

22. Erosion of the transitional addition 

23. Termination of transitional addition 

24. Protection of the transitional addition 

25. Cases where no transitional addition is required 



57 



Part 3 the Impact 

26. Impact on Simplification 

27. Impact on Operations 

28. Support for Local Authorities 

29. Impact on Customers 

30. Impact on Customers with regard to HB/CTB 

31. Impact on Communications 

32. Impact on Legislation 

33. Diversity and Equality Impact 

34. Child Poverty Impact 

35. Rural Impact 

36. Consultation 

37. Evaluation 

Annexes 

Annex A- Impact Assessment 

Annex B - Severe Disablement Allowance 

Annex C - Examples for Amendment to the Housing Benefit Regulations 2006 

(SI 2006/213) 

Annex D -The Housing Benefit Regulations 2006 (SI 2006/213) - Keeling version 



58 



PART 1 - CHANGES TO EMPLOYMENT AND SUPPORT ALLOWANCE 

1 . Overview 

The Employment and Support Allowance (Transitional Provisions) Regulations 
2008 (SI 2008/795), made under the authority of Schedule 4 to the Welfare 
Reform Act 2007, provided that, after Employment and Support Allowance 
(ESA) was introduced, every new claim, (apart from claims that linked back to 
previous claims), for an incapacity benefit 7 in respect of a period which began 
on or after 27 October 2008 should be treated as a claim for ESA. 

These draft Regulations provide for the conversion of existing awards of 
incapacity benefits (together with customers being awarded national 
insurance credits only) to ESA. 

These Regulations would also be made under the powers contained in 
Schedule 4 to the Welfare Reform Act 2007 and would provide - the grounds 
upon which, and the circumstances in which, an existing incapacity benefit 
recipient's award will be converted to an award of Employment and Support 
Allowance and the amount of any such award; and would provide, in particular, 

• the grounds upon which, and the circumstances in which, an additional 
allowance (a "transitional addition") may be awarded to customers, in 
appropriate cases, to protect the rate of incapacity benefit in payment 
to them at the point of conversion on a mark-time basis; 

• the grounds upon which, and the circumstances in which, the value of 
such a transitional addition may be eroded; terminated, and 
resurrected, as appropriate; and 

• the decision-making required to effect conversion. 

The Regulations are designed to facilitate as smooth a move from incapacity 
benefits to ESA as possible, and to protect a customer's overall benefit income 
at the point of transfer by ensuring that no-one who qualifies for conversion to 
ESA sees a cash reduction in their benefit at the point of conversion. 

The draft Regulations would also make consequential amendments to Housing 
Benefit and Council Tax Benefit provisions also to ensure that no one sees a 
cash reduction in their benefit - these are set out in Part 2 of this Memorandum. 

2. Rationale for proposed Regulations 

The Government's aim is to see one million fewer people on incapacity 
benefits and ESA by 2015, and believes that it is right to ensure that, where 
appropriate, people are moved closer to the labour market either through 
looking for work or preparing for a return to work. 



7 We refer to incapacity benefits here and more generally throughout this memo to mean the 
following: Incapacity Benefit (IB), Income Support (IS) paid on the grounds of incapacity or 
disability and Severe Disablement Allowance (SDA). 



59 



At the same time, the Government wishes to ensure that the right people are 
on the right benefit with the right level of support and conditionality; and it 
wants to ensure that all disabled people and people with health conditions in 
similar situations are on the same benefit and are treated equally over time. 

The conversion of customers from existing incapacity benefits onto ESA, 
to which the Government committed itself in the White Paper 'Raising 
Expectations and Increasing Support', published in December 2008, is an 
integral part of achieving these objectives. 

ESA is a more pro-active, work-focused benefit than the older, inactive incapacity 
benefits it is replacing. It is designed to ensure that people receive the support 
they need to take up or prepare for work, where appropriate. This supports 
Departmental Strategic Objective 2, to "maximise employment opportunity for all". 

As part of conversion to ESA, customers will undergo the personalised, robust 
and work-focused Work Capability Assessment (WCA). This will help inform 
what an individual may be capable of doing now or in the future in order to 
return to work. 

3. Background 

ESA was introduced on 27 October 2008 for customers with limited capability 
for work because of illness or disability. It is intended to replace all existing 
incapacity benefits (Incapacity Benefit (IB), Income Support (IS) on the grounds 
of disability and Severe Disablement Allowance (SDA)) as part of a broader set 
of reforms introduced to make the welfare system more active and work-focused. 

The policy intent is for all customers on incapacity benefits or in receipt of 
national insurance credits-only on the grounds of incapacity to go through the 
conversion process for ESA, and for the other incapacity benefit schemes 
(other than for customers over State Pension age in receipt of SDA, see 
section 5) to be wholly wound down following conversion. 

This is not the first time that the Government has moved customers from 
one benefit to another, examples being Supplementary Benefit to IS (1988), 
Sickness Benefit and Invalidity Benefit to IB (1995) and IS to Jobseeker's 
Allowance (JSA) (1996). We have taken into consideration the Social Security 
Advisory Committee's previously stated views about transitional protection as 
set out in the SSAC 12th Annual Report (May 1997 - March 1999). 

With all the previous exercises, however, awards were either converted from a 
single, common date, or, where awards were merged over an extended period, 
the old benefits were treated as awards of the new benefit pending application 
of the new conditions of entitlement. This is not the approach that is proposed 
on this occasion. Instead, because customers need to first undergo the WCA 
in order to establish their entitlement for ESA, the Government plans to 
convert customers on a rolling basis over the period of a pre-determined 
conversion timetable. 



60 



4. Timing 

These regulations provide for conversion to begin from October 2010. The 
intention is to have a phased start from October 2010 designed to test the 
conversion process. A small number of cases will be put through a wholly 
clerical conversion process (i.e. prior to the start of national conversion) to not 
only provide a limited test of the process but to obtain intelligence on customers 
reactions and behaviour, and enable any 're-tuning' of the final process. 

Thereafter, national conversion is planned to start with the referral of customers to 
WCAs from February 2011 and is planned to complete by the end of March 2014. 

Given the number of customers currently receiving incapacity benefits, 
conversion on this scale is a very significant undertaking. Almost 1 .5 million 
customers will go through the conversion process, or around 10,000 cases 
weekly over 3 years. 

5. Order 

The order in which cases are converted is not specified in the Regulations. 
However, it is intended that, under the national conversion exercise, the first 
customers to undergo the conversion process will be those on IB and IS, 
followed by customers on SDA, (see Annex B for more detail about SDA). 
This is because ESAwas designed to replace IB and IS. SDA closed to new 
claims in 2001 and has greater differences with ESA. Conversion for these 
customers, some of whom will have severe conditions, is therefore likely to 
be more complex. In order to best ensure a smooth transition for these more 
complex cases, the Government believes it is better to transfer SDA customers 
once conversion has been running for some time. 

Some SDA customers are already over State Pension age and so it will not 
be possible to convert them to ESA which is a working-age benefit. Customers 
who reach State Pension age during the period of the conversion exercise will 
not be converted to ESA. This avoids requiring them to move benefits twice 
over a short space of time. They will remain on their existing incapacity 
benefit until they move to pension age benefits. 

Customers who are awarded National Insurance credits on incapacity grounds 
but do not receive an award of benefit, will be transferred to ESA after the end 
of the planned conversion period. This is because conversion for these customers 
is unlikely to impact on the benefit they are awarded and these customers are 
not required to engage with support to help them return to work. The Government 
believes that it would not be right to prioritise conversion of a group customers 
who are not receiving benefit at the expense of those who are. 

6. The Conversion Phase 

The necessary preparatory work will take place before conversion begins to 
ensure that customers are aware of how the system will be changing. We are 
providing for Jobcentre Plus to be able to engage with customers before they 
are converted to ESA and while they are still on another incapacity benefit. 



61 



As allowances for children do not form part of ESA, people claiming IS who 
are still receiving increases in respect of their dependent children in the form 
of Child Dependency Allowances will need to have this support moved to the 
Child Tax Credit (CTC) system before conversion begins. The regulations 
specifically provide that all elements of a Child Dependency Allowance will 
not form part of the calculation of an ESA award following conversion. This 
will build on the transfer of support to CTC that has been developed for lone 
parents moving to JSA or ESA as part of the recent lone parent obligations 
changes, which reduced the age of the youngest child at which lone parents 
can remain on IS. The transfer to CTC reflects the Government policy since 
2003 to transfer all support for children to CTC. 

Customers who have private income that exceeds their child allowance 
may lose their entitlement to income related benefits, other than HB/CTB, 
all together 8 , although they will continue to receive the same total amount 
of support as before through the Child Tax Credit system . 

In this circumstance a customer will also lose their automatic passport to 
Housing and Council Tax Benefit, but should remain eligible for the same 
amount of support. 

In some circumstances it may be the case that a partner is already receiving 
CTC for the same child as the IS customer who is receiving the Child Dependency 
Allowance. Only one of them will be entitled to CTC and therefore a customer may 
see a reduction in their income. This is because the couple were being paid twice 
for the same child which is against government policy as it duplicates provision. 

People who receive Child Dependency Increases (CDI) as part of their IB 
will have these protected as part of their transitional addition. This is because 
some IB customers are already receiving CTC which cannot be increased 
further to compensate for the loss of the CDI. 

The conversion phase for each customer will begin when they are notified 
both that they are going to go through the conversion process and that their 
existing award of incapacity benefit will cease once the conversion phase is 
over. They will also be informed that they will need to complete an ESA50 
questionnaire and potentially undertake a face to face assessment with a 
health care professional to determine their eligibility for ESA. 

The Regulations provide that the Secretary of State will initiate the conversion 
process for each individual case at any time. In practice, the timing in each 
case will be determined by the review date for the Personal Capability 
Assessment that the customer currently has to undergo in connection with 
their claim for incapacity benefits. This date is set according to the Health 
Care Professional's prognosis of when a condition may have changed. It may 
be necessary to adjust the dates to ensure that these are spread evenly over 
the conversion period. 



8 If a customer's support for their children is moved from IS to the Child Tax Credits system 
their applicable amount of IS will reduce. If they have personal income that exceeds the new 
applicable amount of IS they will therefore cease to have an entitlement to IS. 



62 



For the purposes of the conversion exercise, no claim to ESAwill be required 
- an award of another incapacity benefit or credits will be sufficient to trigger 
the process. Whether any individual award qualifies for conversion will 
thereafter depend on satisfaction of the basic conditions for entitlement to 
ESA- in particular, that the customer has limited capability for work. 

After the WCA has been carried out, the decision as to whether an award 
qualifies for conversion to ESAwill be made by the Jobcentre Plus decision- 
maker acting on behalf of the Secretary of State. The decision will be effective 
from a future date - referred to in the regulations as the "effective date" - 
which is linked to the actual date of the decision. The effective date will be no 
less than two weeks but no more than four weeks after the date of the decision. 

A customer will remain on their current incapacity benefit(s) until the effective date, 
at which point their incapacity benefit will end and, if their awards qualify for 
conversion, they will move to ESA. If their awards do not qualify for conversion, 
because they have been found not to have limited capability for work, the 
customer is entitled to claim another benefit. Setting the effective date in the 
future in each case is intended to smooth the transition from incapacity 
benefits and help ensure there is no break in payment for any customer. 

If the decision-maker decides that the customer does not qualify for conversion 
to ESA (because they have been found not to have limited capability for work), 
the customer will have the right of appeal (see section 12) to an independent 
appeal tribunal. 

There will be a number of customers who are in receipt of IS on the grounds 
of incapacity but who concurrently have another ground of entitlement to IS 
e.g. carers or lone parents. If these customers are found fit for work they will 
then have the right to remain on IS on these other grounds. 

Customers who qualify for conversion to ESAwill not have to serve any part 
of the normal thirteen week assessment phase of ESA that new ESA customers 
go through before their WCA. They will immediately be placed in either the 
Work Related Activity Group (WRAG) or in the Support Group (SG), receiving 
the relevant personal allowance and component from the effective date. 

For customers who were previously in receipt of IB or SDA, their benefit will 
be converted to contributory ESA; if they were previously in receipt of IS, they 
will be converted to income-related ESA. In the same way as with normal 
ESA claims, contributory ESA can be paid with an income-related top up. 

Subject to HMT agreement, on conversion to contributory ESA from IB, it is 
planned customers will be liable to income tax on their ESA in the same way 
as new contributory ESA customers. This will include those customers who 
have previously received IB with no tax liability, such as former Invalidity 
Benefit and Sickness Benefit customers. 

We estimate that up to 3% (or 50,000) customers could have an increased tax 
liability. Customers would not lose any benefit as a result, as on conversion 
benefit levels would be protected. However, they would have to pay on 



63 



average an estimated £1000 a year in income tax. These will be customers 
with the highest incomes, the vast majority of whom are already liable for 
tax and have other sources of income that take them over the £6,475 income 
tax threshold. 

7. Back to Work Support 

Those customers who are found to have limited capability for work and placed 
in the WRAG will be required to attend Work-Focused Interviews (WFIs). The 
Government intends that those converted to ESA receive personalised support 
to help them prepare for a return to work 

Customers who are placed in the support group will not have any 
requirements placed on them but are free to take up the help available to the 
work-related activity group on a voluntary basis. 

8. Treatment of Occupational and Private Pensions 

Currently customers who claimed IB or SDA before April 2001 or are entitled 
to the highest care component of Disability Living Allowance do not have their 
benefit reduced if they have occupational pension or private income. In contrast 
ESA customers have half of any occupational or private pension over £85 per 
week deducted from their benefit. For example a person with a pension of 
£100 a week, would have their ESA reduced by £7.50 a week. Anyone who 
currently benefits from the existing provision that disregards any occupational 
or private pension in their award of IB or SDA will continue to have this 
ignored when they transfer to ESA. 

9. Transitional additions 

The structure of ESA and its rate of allowances vary significantly from each of 
the incapacity benefits it is replacing - IB recipients, in particular, if they receive 
additions for dependants, can currently receive higher rates than ESA customers. 

Ministers have committed on several occasions that no existing incapacity 
benefit customer will see a cash reduction in their benefit on conversion to ESA. 

In moving both to protect the amount of benefit paid to existing customers at 
the point of conversion, and to deliver the same amount of financial support to 
all over time, our strategy is based around two general principles: 

where, at the point of conversion, people receive more by way of 
incapacity benefit than they will by way of ESA, their existing benefit 
awards will be frozen and they will be awarded additional allowances 
on a transitional basis - "transitional additions" - (equivalent to the 
shortfall between the two rates) until the rate of ESA payable catches 
up; and 

where they receive less by way of incapacity benefits than they will by way 
of ESA, their benefit will immediately be increased to the ESA rate payable. 



64 



The rules relating to the administration of the transitional additions are designed 
to be as simple, straightforward and as accessible as possible, for customers and 
staff alike, minimising the need for complex IT solutions and clerical interventions. 

After conversion, the Government will continue to apply the normal ESA rules 
for taking income (including part-time earnings) and changes in income into 
account within the ESA assessment, but changes in income will not affect 
the transitional addition itself. This will help to avoid penalising people for a 
temporary change in their income, or discouraging partners from working 
part-time. Not taking into account changes in income in the transitional 
addition will also avoid complex recalculations of the transitional protection 
figure if income fluctuates frequently; and it significantly simplifies the 
specifications required to develop the supporting IT systems. 

10. Erosion of the transitional addition 

The intention is to ensure that all disabled people and people with health 
conditions in similar situations are on the same benefit and are treated equally 
over time. The Regulations therefore provide for the erosion of the transitional 
addition in specified circumstances, with a view to aligning the rates of benefits 
payable to new and converted ESA customers over time. 

For customers on income-related ESA, the transitional addition will be eroded 
by an amount equivalent to any increase in the customer's applicable amounts. 
This might apply most commonly at the annual uprating, for example, or 
where a partner joins the household. Similarly, for customers on contributory 
ESA, the transitional addition will be eroded by any increase in their 
applicable amounts (e.g. at uprating). Eroding a customer's transitional 
addition by any increase in their ESA applicable amounts means that the 
customer may see no change in their benefit income as a result of uprating, 
until the value of the transitional addition has been reduced to nil. Other 
changes of circumstance will affect their ESA awards in the normal way. 

Similarly, for customers on contributory ESA, the transitional addition will be 
eroded by any increase in their ESA rate (e.g. at uprating). Additionally to 
avoid carrying on paying customers on contributory ESA amounts of benefit to 
which they would not have remained entitled had they remained on incapacity 
benefits, the transitional addition will also be eroded in the circumstances where, 
prior to conversion, the customer was in receipt of an increase of benefit for 
an adult or child, and, subsequent to conversion, the adult dependant dies or 
separates from the customer, or the customer ceases to be entitled to child 
benefit for the child. 

In these circumstances, the customer will see a drop in their income: their 
transitional addition will be reduced by an amount equivalent to the amount of 
the Adult Dependency Increase (ADI) or Child Dependency Increase (CDI) in 
payment at the point of conversion. 

To prevent a duplicate award from public funds, the transitional addition 
payable in contributory ESA cases will also be eroded when the customer's 
partner becomes entitled in their own right to a social security benefit at a rate 



65 



equivalent to, or more than, the amount of the ADI in payment at the point of 
conversion. Again, in these circumstances, the customer will see a drop in 
their income. 

When a customer no longer satisfies the basic conditions of entitlement to ESA, 
including for those on income-related ESA where their partner commences 
full-time work, their transitional addition will end. The ESA linking rules will 
apply in this circumstance (see 11.2). 

The transitional addition will no longer be paid in the circumstances where it 
erodes to nil. Finally no transitional additions will be paid from 6 April 2020. 
This is intended to strike a balance between smoothing the transition to ESA 
and removing the need to administer transitional additions for a long period 
after conversion. By this time we only expect around 5,000 customers to still 
be entitled to a transitional addition, most of whom will have been in receipt of 
an ADI. Removing transitional additions from this date aligns with the removal 
of ADIs from State Pensions, Carer's Allowance and Maternity Allowance. 

11. Suspension of transitional addition: linking Rules 

It is important to remove financial disincentives that deter or prevent customers 
and their partners from entering work, whether part-time or full-time. We are 
therefore providing a safeguard against the potentially adverse effects of 
trying work. 

Where a customer's partner takes up full-time work and as a result the 
customer's ESA ends, any transitional addition in payment at the time will be 
treated as suspended. If the partner's circumstances change and the customer 
becomes entitled to ESA again within 12 weeks of the end of the previous 
award, the transitional addition will be restored at the same rate as it would 
have been payable at, had they not left ESA. 

Where a customer ceases to have limited capability for work and then 
re-claims ESA within 12 weeks, or within 104 weeks where they were 
engaged in work or training in the interim, their transitional addition will be 
restored at the same rate it would have been payable if they had not left ESA. 

12. Appeals 

There will be a single appeal right covering the outcome of the whole 
conversion process, both the termination of the incapacity benefit award and 
the decision on ESA entitlement. 

If a customer does not satisfy the criteria of the WCA and appeals, they may 
be awarded the equivalent of the ESA assessment phase rate until the appeal 
is heard. This is the same as for current ESA customers who appeal against 
the decision that they do not have limited capability for work. There are no 
reliable estimates at this stage for the numbers likely to appeal because the 
ESA appeal rates have not yet reached a steady state. 



66 



An appeal could take some time and while, if a customer is successful at 
appeal they will have their applicable amount of ESA backdated, they may 
be on the lower assessment phase amount for some time during the appeal. 

It is possible for a customer to elect to claim JSA or IS on other grounds 
during their appeal. In this case they will not be awarded the ESA assessment 
phase rate as they cannot receive two benefits at the same time. 

If the customer were previously on IS and continues to satisfy another 
condition of entitlement to IS, they will be entitled to remain on IS, subject 
to the withdrawal of the disability premium, where appropriate. 

In the event of a successful appeal, ESA will, of course, be awarded: the 
customer's entitlement to a transitional addition (if any) will be calculated and 
backdated to the effective date. If their appeal is unsuccessful their award of 
ESA will be terminated from the date of the tribunal's decision and just like 
existing ESA customers they will need to consider what other benefits they 
may wish to claim. 

The Government recognises that although people have been found fit for 
work they may still have health issues and intend to make the transition to 
JSA as smooth as possible. The refreshed Jobseeker's Allowance regime 
and Flexible New Deal are designed to offer personalised, tailored support 
to customers. This includes the needs of customers with a health condition 
or disability who will get more intensive support as they progress through 
their claim to help overcome related barriers to work. They may restrict their 
availability for work provided those restrictions are "reasonable" given their 
condition, be fast-tracked to the point in the customer journey where additional 
support becomes available and receive specialist disability services from the 
Disability Employment Adviser network. 

13. Compliance with the conversion process 

In order to achieve conversion from incapacity benefits to ESA there are 
certain things that the customer will be required to do. Specifically, they will 
need to complete the ESA50 and, where necessary, attend a face-to-face 
interview with a health care professional. If a customer fails to do these things 
without good cause, subject to the existing safeguards in the Employment 
and Support Allowance Regulations 2008, a decision that they are treated as 
not having limited capability for work will be issued and their existing incapacity 
benefit(s) will cease from the effective date (see section 16). 

A further safeguard to this is that if, subsequent to a decision that the 
customer has failed without good cause to engage with the conversion 
process, they satisfy Jobcentre Plus that they did, after all, have good cause, 
their benefit will be restored in full and the conversion process will resume. 



67 



PART 2 - CHANGES TO HOUSING BENEFIT AND COUNCIL TAX BENEFIT 

14. Regulations that would be amended 

The draft regulations would also amend the: 

• Housing Benefit Regulations 2006 (SI 2006/213); 

• Council Tax Benefit Regulations 2006 (SI 2006/215); and 

• Housing Benefit and Council Tax Benefit (Decisions and Appeals) 
Regulations 2001 (SI 2001/1002). 

The amendments would ensure that the income of customers will not reduce, 
for example, if HB/CTB entitlement would reduce because it interacts differently 
with ESAthan with the other incapacity benefits. Examples showing how the 
amendments work are included at Annex C. A Keeling version of the relevant 
provisions showing the effect of the proposed amendments is at Annex D. 

15. Background - structure of ESA and interaction with HB/CTB 

The HB/CTB applicable amount is formed of a personal allowance for the 
customer, (and partner and children, where appropriate) and any appropriate 
premiums. It is used in the income test which determines how much HB/CTB 
can be paid. The higher it is the more help that can be given towards rent and 
council tax. If a customer's income is the same as or less than their applicable 
amount they are entitled to full eligible HB/CTB. 

For pre-existing incapacity benefits customers, if they are in receipt of HB/ 
CTB, a Disability Premium is a part of the applicable amount which is used in 
assessing how much HB/CTB can be paid. The premium is currently worth 
£27.50 (single customer) and £39.15 (couples) a week. 

Existing HB/CTB customers may also receive an Enhanced Disability Premium 
(EDP) where they are entitled to the highest rate of the care component of 
Disability Living Allowance (DLA). 

Income-related ESA(ESA(IR)) and contributory ESA(ESA(C)) are normally 
payable in two stages, an initial assessment phase for which a basic amount 
is awarded, and a main phase when an additional amount is awarded. This 
additional amount is either the work-related activity component or the support 
component, worth £25.50 and £30.85 a week respectively. The EDP will also be 
awarded in ESA(IR) where the customer is entitled to the support component. 

On the introduction of ESA, the structure of HB/CTB for ESA customers was 
amended so that it reflects that of ESA(IR) The relevant component forms 
part of the HB/CTB applicable amount and the Disability Premium does not. 
Also, customers entitled to the support component are entitled to the EDP, 
if it has not already been included in the HB/CTB applicable amount via the 
DLA route. 



68 



As the Disability Premium rates (£27.50, single/£39.85 couple) are higher 
than the ESA work-related activity component (£25.50), customers entitled to 
that component following conversion would have a lower applicable amount 
than they had prior to conversion, and their total benefit income could reduce, 
if legislation is not amended to restore the level of the applicable amount. 

16. The effects of conversion on HB/CTB 

Existing HB/CTB customers who previously were receiving IS, and receive 
ESA(IR) following conversion will continue to get full eligible (passported) 
HB/CTB. Customers who were receiving IB/SDA without an IS top-up who 
become entitled to ESA(IR) will also be entitled to passported HB/CTB. 

For HB/CTB customers entitled to standard HB/CTB, existing HB/CTB 
legislation means that once customers convert to ESA, the Disability Premium 
can no longer be included in the applicable amount, but a component must 
be. The effect on HB/CTB entitlement depends on which ESA component is 
awarded. For example: 

(i) where customers get ESA(C) only their HB/CTB applicable amount, 
and hence their HB/CTB, would reduce if they get the work-related 
activity component as it is lower in value than the Disability Premium; 

(ii) HB/CTB would also reduce if customers were placed in the ESA 
assessment phase pending outcome of an appeal against a decision 
that they are not entitled to ESA, as their applicable amount would no 
longer include a Disability Premium, and a component could not be 
added to the applicable amount; 

(iii) if the support component were awarded, customers' HB/CTB 
applicable amount would increase and so HB/CTB would often 
increase. This is because the support component has a higher value 
than the Disability Premium for a single customer, and it also brings 
with it entitlement to the EDP The amounts in combination are higher 
than the Disability Premium, single or couple rate; 

(iv) if the support component were included in the applicable amount but 
the customer previously qualified for the EDP via DLA, HB/CTB would 
be likely to reduce, although overall the customer would be better off 
because the increase in their ESA compared with their IB will be 
greater than the reduction in HB/CTB - see paragraph 25.1 . 

There are seven illustrative examples in Annex C showing when customers could 
be better or worse off and the effects of protecting the HB/CTB applicable amount. 

17. Proposed HB/CTB amendments 

HB/CTB customers entitled to ESA(IR) 

As mentioned in para 16.1 above, where customers are converted to 
ESA(IR), they would be entitled to full eligible HB/CTB. 



69 



HB/CTB customers not entitled to ESA(IR) 

For all other converted cases, local authorities would recalculate the HB/CTB 
applicable amount, thereby adjusting HB/CTB to reflect the interaction with ESA 
structure. They would then compare the pre and post-conversion applicable 
amounts. Where the post-conversion applicable amount would be higher than 
the pre-conversion level they would apply the higher amount immediately. 
However, to prevent a reduction in overall benefit income, where the post- 
conversion applicable amount would be lower than the pre-conversion level, 
they would add a transitional addition to the post-conversion applicable 
amount to make up the shortfall. 

The comparison of pre and post-conversion applicable amounts enables the 
local authority to make a straightforward adjustment in all cases even where 
there are other changes, for example in rent levels. 

Whilst this would not prevent a reduction in HB/CTB where ESA is higher than 
IB, it would ensure no one's overall benefit income would reduce. 

18. The amount of the transitional addition 

Using 2009/10 rates, the transitional addition would in the majority of cases 
be £2.00 a week for single customers (the difference between the Disability 
Premium (£27.50) and the work-related activity component (£25.50)) and 
£13.65 a week for couples (the difference between the couple rate Disability 
Premium (£39.15) and the work-related activity component (£25.50)). 

Amount of the transitional addition for customers who appeal against a 
decision that they are not entitled to ESA 

The transitional addition would also be at a higher level where a customer appeals 
a decision not to convert an existing benefit to ESA. In such circumstances, 
the customer would be treated for ESA purposes as if the appeal were against 
a decision made on an ESA claim that the customer did not have limited 
capability for work. This would provide the customer with the basic amount but 
no transitional addition. However, the HB/CTB applicable amount would be 
protected to align the provisions with existing provisions for customers whose 
IB ceases because they do not satisfy the Personal Capability Assessment. 

On resolution of the appeal the HB/CTB would be reviewed in line with that 
decision. If the customer wins the appeal and ESA(IR) is awarded from the 
effective date of conversion, full eligible passported HB/CTB would also be 
awarded from the same date. 

If the customer wins the appeal, and main phase ESA(C) is awarded from 
the effective date of conversion, they will also be awarded, where appropriate, 
any transitional addition to protect the rate of incapacity benefit in payment 
immediately prior to conversion. Local authorities would mirror this procedure 
for HB/CTB. From the same date they would recalculate the applicable amount, 
awarding the main phase personal allowance, the relevant component and 
any relevant premium and a transitional addition where this revised applicable 
amount is less than the pre-conversion applicable amount. 



70 



Winning the appeal may mean that HB/CTB has been overpaid for the period 
pending the appeal hearing. However, the equivalent situation can currently 
occur where a customer is in receipt of IB and fails their Personal Capability 
Assessment. Where this happens they generally claim IS and get full eligible 
HB/CTB. If they win the appeal they are entitled to arrears of IB which could 
extinguish entitlement to IS. The local authority would attribute the award of 
IB over the past period meaning an overpayment had occurred which would 
be recoverable from the customer. 

19. The effective date of the conversion change 

Except for cases converting during the up-rating period (see paragraph 21.1 
below) ESA conversion would take effect in HB/CTB from the day the decision 
to convert to ESA takes effect. 

If there are other changes of circumstances occurring in the same benefit week 
but not effective on that same day, these would take effect as they usually 
would in accordance with normal change of circumstance provisions. They 
would not affect the calculation of the transitional addition in HB/CTB. This 
would ensure transitional addition would be neither inflated nor deflated as a 
result of changes of circumstance which would have nothing to do with ESA 
conversion, and is consistent with the approach being adopted in ESA itself. 

20. Other changes of circumstances effective on the same day 
as conversion 

Where other change(s) of circumstances that would affect the applicable 
amount are effective from the same date as conversion, the pre-conversion 
applicable amount would be based on the amount that would apply to the 
customer on the day of conversion, had the claim not been converted to ESA. 
The post-conversion applicable amount would also take into account the 
change that had happened on the day of conversion. 

Example - single customer, partner joins the household and the effective 
date of the change is 6 June 2011. Customer converted to ESA with effect 
from 6 June 2011. The pre and post-conversion applicable amount would 
include the partner. 

This would ensure that other changes would not inflate/deflate any transitional 
addition. We have attempted to provide for a means of protecting overall 
benefit income that is as simple, straightforward and understandable for 
customers and staff, minimising the need for complex IT solutions. 

21. Conversion coincides with the annual uprating of social 
security benefits 

Under existing provisions, local authorities uprate HB applicable amounts on 
the first Monday in April, if the rent is payable on a weekly basis, or on 1 April 
if rent is paid at any other interval. The CTB applicable amounts are uprated 
on 1 April. Uprated amounts of social security benefits are taken into account 
as income from the same date, provided the altered rate takes effect in the 



71 



period 1-14 April. This means that LAs can combine rent/council tax/ 
applicable amount/income increases from the same date, thereby removing 
the need for multiple decisions and amendments to rent/council tax bills. 

The same provision would apply where conversion to ESA is effective during 
the two week uprating period. When comparing pre and post-conversion 
applicable amounts the local authority would use the uprated amounts in both 
cases. This would prevent uprating affecting any transitional addition and 
would reflect the ESA provisions. 

22. Erosion of the transitional addition 

The transitional addition would be eroded using the same principles and 
process to be applied to ESA(IR) cases. That is the level would be reduced 
at a subsequent annual uprating or when a change of circumstances would 
increase the applicable amount, for example the customer becoming entitled 
to the support component rather than the work-related activity component. 

23. Termination of transitional addition 

The HB/CTB transitional addition would end where: 

• applying the erosion principles set out in paragraph 22.1 above the 
transitional addition is reduced to nil; 

• whilst remaining entitled to ESA(C), a change of circumstances means 
the customer is no longer entitled to HB/CTB. For example because 
their capital increases to more than £16,000 or they no longer have a 
liability to pay rent or council tax 

• the customer moves off ESA onto another benefit, for example 
contributory Jobseeker's Allowance (JSA(C)) including those who are 
awarded provisional ESA pending the outcome of an appeal which 
they subsequently lose. Such customers would no longer have their 
claim processed on the basis of being an ESA customer. 

This would align the procedures with existing HB/CTB rules where, if a 
customer moves from IB only to JSA(C) and the only reason the Disability 
Premium was included in their applicable amount was because they had IB, 
they would lose the Disability Premium in HB/CTB. 

• The customer moves off ESA but does not claim any other benefit. 
This would then be a "standard" HB/CTB claim and the calculation of 
the applicable amount would be on a non-ESA basis - this would 
include cases where provisional ESA was awarded pending the 
outcome of an appeal and the customer loses the appeal. 

The customer is in receipt of HB/CTB and still has a transitional addition on 
5 April 2020. This provision has been inserted to maintain consistency with 
the ESA provisions. 



72 



24. Protection of the transitional addition 

The ESA transitional addition proposals would provide that where the 
customer leaves ESA for whatever reason and reclaims within 12 weeks, or 
within 104 weeks where they were engaged in work or training in the interim 
("work or training beneficiaries" within the meaning of the ESA Regulations, 
regulation 148), the transitional addition payable on the earlier claim would be 
reinstated in the new claim, subject to any reductions in that amount which 
would have occurred under the erosion rules. The same protection would 
apply in HB/CTB. 

25. Cases where no transitional addition is required 

There is a small group of customers who would have a higher applicable 
amount following conversion but would nonetheless see a reduction in their 
HB/CTB. These are customers whose applicable amount increases, but the 
increase in the amount of ESA(C) over their IB is higher than the increase in 
the applicable amount. There is no provision to protect them as their overall 
benefit income would be higher on conversion (see example 3 in Annex C). 



73 



PART 3 -IMPACT 

26. Impact on Simplification 

The introduction of a Transitional Addition to ESAwill add some complexity to 
the benefit system on a short term basis. However this is necessary to fulfil 
the Ministerial commitment to safeguard the benefit awards of all customers 
whose awards qualify for conversion to ESA. Moreover, the conversion of 
customers from incapacity benefits will over time be a simplification, providing 
customers with equal financial support and help in returning to work. It will 
also simplify the administrative process for staff and customers as it will no 
longer be necessary to maintain dual systems. 

Awarding a transitional addition would also initially introduce complexity to 
HB/CTB for customers converted to ESA. However the proposals would be 
fair and would mean the appropriate support would be provided to customers 
at the point of conversion. The calculation of the HB/CTB transitional addition 
and any erosion would be consistent with ESA thereby reducing complication 
for customers and for local authority and DWP staff. 

27. Impact on Operations 

In order to achieve the conversion of incapacity benefits to ESA, some 1.5 
million cases will need to be transferred over the period 2010 to 2013/14, 
around 10,000 cases per week. This is a considerable undertaking for 
Jobcentre Plus and its contractors. In order to lessen the impact, as much of 
the work as possible will be automated, particularly around the assessment 
and payment of benefit awards. For example, systems will re-use existing 
customer data as far as possible thereby negating the need for re-keying, 
calculate the appointed 'safe' date when payments will cease for one benefit 
and start with another, and make comparisons of pre- and post awards of 
benefit to calculate any transitional additions. Steps are also being taken to 
increase the medical capacity that is available to undertake the necessary 
medical assessments. 

At the start of the conversion exercise it is estimated that approximately 4,800 
full time equivalent Department of Work and Pensions staff will be delivering 
incapacity benefits. To deliver conversion to ESA between 2010 and 2013/14 
approximately a further 700-900 full time equivalent staff will be required. The 
assumption is that many of the staff recruited during the downturn will be 
redeployed to support the conversion exercise. 

28. Support for Local Authorities 

For local authorities to effectively administer the changes and for there to be a 
seamless transition for customers it will be very important that local authorities 
are provided with relevant information by Jobcentre Plus. This will include 
where a customer is to be converted, the date that will happen and the 
element of ESA to be awarded 

• where a customer is not to be converted the date IB/SDA will end and 
whether any other benefit will be awarded, for example JSA. 



74 



We are currently working with Jobcentre Plus colleagues to ensure that the 
necessary information will be provided by computer systems thereby making 
the transition as smooth as possible 

We are also discussing the allocation of additional funding. 

29. Impact on Customers 

It is intended that the conversion to ESA will be as seamless as possible for 
customers. Customer data will be re-used as much as possible, reducing the 
need for additional customer actions. Safeguards will be in place for those 
more vulnerable customers who may fail to understand the process or what is 
happening. Customers should at the end of the process have been converted 
to ESA without any interruption of payment. Incapacity benefits customers 
who convert to ESA will gain from a new, simpler, more active benefit as well 
as a conditionality regime which offers positive intervention and an enhanced 
level of support. Those who are not eligible for ESA will no longer be entitled 
to any incapacity benefit from the effective date and will have to claim JSA. 
Customer enquiries are expected as a result of both a reaction to publicity 
and from queries regarding their entitlement. Customer enquiries are most 
likely to be regarding conversion of individual cases, change of circumstances, 
conditionality, appeals and complaints. The outcomes from the pilot (para 4.1) 
will influence our understanding on this issue. 

30. Impact on Customers with regard to HB/CTB 

We expect that of the 1 .5 million claims to be converted to ESA during the 
three year period, around 400,000 would be entitled to ESA(IR) and to 
passported HB/CTB and around 200,000 would be entitled to ESA(C) and 
standard HB/CTB. It would be these standard cases that must be reassessed 
and of these we estimate around 150,000 would require a transitional addition 
in HB/CTB. As set out earlier in this memorandum, the order of conversion 
will be based on case type and next PCA review date, meaning the pace of 
rollout will be even and will not be geographical. Therefore, individual local 
authorities should not be faced with peaks of work. 

31. Impact on Communications 

Work is currently ongoing to develop a communication strategy for the ESA 
regime, including incapacity benefits conversion. Effective communication to 
staff, customers and stakeholders will play a fundamental role in supporting 
successful conversion from incapacity benefits to ESA, ensuring that all 
affected by this policy change have a clear understanding of the processes 
and actions necessary to support conversion. Our objectives for 
communication include: 

• For customers - to ensure that customers and their representatives 
and advocates understand what the new ESA programme means for 
them, how it works, what is going to change for them and when and 
how they will be affected. 



75 



• For stakeholders - to provide wider understanding and assurance that 
ESA is a safety net, supporting people who cannot work and focusing 
help on those who can prepare for a return to work. 

• For staff- to ensure that DWP and provider staff understand the policy 
and processes in relation to incapacity benefits conversion and are 
able to effectively communicate to customers and support them 
through the conversion process; 

• There are a numbers of lessons we've taken from the roll out of ESA 
that we will apply to this conversion process. Specifically we will not 
under estimate the amount of customer interaction and support 
needed to explain the process and to help them navigate through each 
step of the customer journey. We are also aware of the culture change 
that is needed to engender the change for both our customers and 
staff- supporting our customers with messaging around what they can 
do and work readiness notwithstanding the nature of their incapacity. 

32. Impact on Legislation 

These draft Regulations would apply the Employment and Support Allowance 
Regulations 2008 and other legislation with modifications. They also amend 
the ESA Employment and Support Allowance (Transitional Provisions) 
Regulations 2008 so as to provide for conversion from incapacity benefits to 
ESA and the Housing Benefit and Council Tax Benefit Regulations to protect 
customers' overall benefit income at the point of conversion. 

33. Diversity and Equality Impact 

See Impact assessment at Annex A 

34. Child Poverty Impact 

See Impact Assessment at Annex A 

35. Rural 

See Impact Assessment at Annex A 

36. Consultation 

The Government originally set out its strategy for helping those with a health 
condition or disability in its Green Paper l A new deal for welfare: Empowering 
people to worW (Cm 6730) published in January 2006. This made it clear that 
Employment and Support Allowance would in the first instance, only be for 
new customers and would not affect those customers who were already in 
receipt of Incapacity Benefit or Income Support on disability grounds. 

In the Green Paper 'No one written off: reforming welfare to reward 
responsibility' (Cm 7363) 9 , published in July 2008, it was announced that 



http://www.official-documents.gov.uk/document/cm73/7363/7363.pdf 

76 



current incapacity benefits customers would be subject to the new ESA 
regime. In the consultation paper, The Green Paper Consultation: No one 
written off- reforming welfare to reward responsibility', 10 December 2008, it 
was noted that most people welcomed welfare reform and recognised that 
changes needed to be made. The responses to the specific proposal to 
convert current incapacity benefits customers to ESA centred largely on the 
proposal that, as part of plans to smooth the transition to ESA IB customers 
with an age addition would have their benefit frozen until they were converted 
to ESA. Following consultation, the Government published its response in the 
White Paper 'Raising expectations and increasing support' (Cm 7506) 11 on 
10 December 2008. As a result of the consultation the Government decided to 
align the rates more slowly by continuing to increase IB by half of the normal 
uprating from April 2009. The additions will therefore be phased out more 
gradually than previously planned. The Department wrote to the Committee 
on 16 January 2009 explaining how it intended to do this as part of the 
Uprating Order 2009. 

Since the White Paper was published consultation has continued with a range 
of voluntary organisations on request to listen to their concerns in relation to 
the detailed policy and to consider if, and how, those concerns can be overcome. 
The main points which have emerged have been concerns about the timing of 
the WCA following the introduction of the Regulations; use of existing medical 
information to limit the need for vulnerable people to undertake WCAs and 
the need to ensure ensuring continuity of payment. There have also being 
concerns about the impact the WCA will have on eligibility for ESA given the 
disallowance rate for new ESA customers. 

Jobcentre Plus has ongoing consultation with representative organisations 
through a series of events, including workshops and presentations at existing 
forums and local meetings. Jobcentre Plus will continue to keep representative 
organisations informed as operational plans develop. 

We are proactively engaging with key stakeholder groups on the detail of 
these regulations, including meeting with the Disability Benefits Consortium in 
January 2010, and engaging with stakeholders through regular events such as: 

• the DWP Scottish Annual Stakeholder Forum held on 25th November 

• the JCP Customer Representative Group Forum held on 9th December 

• the DWP Policy Strategy Forum to be held on 17th December 

• the Welsh Annual Forum scheduled for January 2010 

We have arranged follow up meetings with some of these forums; for example 
we will meet with stakeholders in Scotland and the Jobcentre Plus Customer 
Representative Forum again in early 2010. We will also continue to engage 
with stakeholders on a one to one basis. 



10 http://www.dwp.gov.uk/docs/consultationreport.pdf 

11 http://www.official-documents.gov.uk/document/cm75/7506/7506.pdf 



77 



The Local Authority Associations are being consulted on the proposals in 
respect of HB/CTB. This is in addition to the consultation activities in relation 
to conversion to ESA, more generally. 

37. Evaluation 

The evaluation of the Employment and Support Allowance is underway and 
comprises a number of quantitative and qualitative elements. These are 
designed to provide a comprehensive picture of how the benefit is working 
and whether it is meeting its objectives. Research is taking place with 
customers, Jobcentre Plus and Pathways to Work provider staff, and ATOS 
Origin healthcare professionals delivering the WCAand the work- focused 
health-related assessments (WFHRA). 

The first report of this evaluation, looking at the early implementation of ESA, 
is due for publication in early 2010. Reports of research into experiences and 
views of the WCAand WHFRA, a longitudinal survey of ESA applicants, and 
overall staff and customer experiences are also planned, with completion of 
the evaluation expected in 2011 . We are also considering how to evaluate the 
conversion of current incapacity benefit claimants to ESA. 



78 



Annex A - Impact Assessment 



Summary: Intervention & Options 






Department /Agency: 

Department for Work and 
Pensions 










— 

npact Assessment of migration of incapacity benefits 
ustomers on to Employment and Support Allowance 


Stage: Implementation 


Version: Draft 


Date: December 2009 


Related Publications: 



Available to view or download at: 

http://www. 

Contact for enquiries: 



Telephone: 



What is the problem under consideration? Why is government intervention necessary? 

There are 2.3 million people on incapacity benefits in Great Britain. Many have had little support to get 
back to work and effectively been written off. This is not only bad for the individual but for the economy 
as a whole. Without intervention from the government, there is a risk that people who could return to 
work will remain on benefit and not return to work. The 2008 Welfare Reform White Paper announced 
an intention to migrate existing incapacity benefits customers to Employment and Support Allowance 
(ESA) which provides customers with a more active benefit including employment support. 



What are the policy objectives and the intended effects? 

The overarching policy objective is to ensure that people with health conditions are supported and 
enabled by the benefit system rather than 'written off'. Migration will move people to a more modern, 
more active benefit with all customers treated equally over time and most financial help for the most 
severely disabled people. Part of the process of assessing entitlement to Employment and Support 
Allowance is the Work Capability Assessment (WCA) which is a new and more robust medical 
assessment that provides an accurate assessment of what an individual is capable of doing. 



What policy options have been considered? Please justify any preferred option. 

1. Do nothing 

2. Migrate people from existing incapacity benefits to ESA 

This policy objective is to ensure that people with health conditions are supported and enabled by the 
benefit system to return to work where they can rather than 'written off. Migration also links into the WCA 
process which will secure savings. Neither of these would be realised under the "do nothing" option. 



When will the policy be reviewed to establish the actual costs and benefits and the achievement of the 
desired effects? We will evaluate the early phase to inform national migration and we will continually 
assess using a combination of Management Information and commissioned research. 



Ministerial Sign-off For Impact Assessments: 

/ have read the Impact Assessment and I am satisfied that (a) it represents a fair and 
reasonable view of the expected costs, benefits and impact of the policy, and (b) the 
benefits justify the costs. 

Signed by the responsible Minister: 



Date: 



79 















>ummary: Analysis & Evidence 




Policy Option: 
Migration to ESA 






. .. . . , . , . . 






:MH<l'H[OlWIIII'MH»:K^:l^-^:1lH^ll«'jaillL'ir-H[']lK')«III>t:|'r-M^'a»I^II:J 




customers on to Employment and Support Allowance 







ANNUAL COSTS 


Description and scale of key monetised costs by 'main 


One-off (Transition) 


Yrs 


affected groups': Costs of paying extra benefit to the poorest 
and most severely disabled people when they migrate. Cost of 
implementing migration and ongoing costs of administering ESA 
claims. Costs of paying benefits to those found fit for work moving 
on to other benefits. 




£288 million 


5 


W*M 


Average Annual Cost 

(excluding one-off) 






£254 million 




Total Cost (PV) 


£1,268 million 


Other key non-monetised costs by 'main affected groups' 



ANNUAL BENEFITS 



One-off 



£- 



Yrs 

5 



Average Annual Benefit 

(excluding one-off) 



Description and scale of key monetised costs by 'main 
affected groups': Benefit savings from those who are found fit for 
work when they are assessed using the WCA and from alignment 
of benefit rates. Reduced administration costs from a simplified 
benefit system. 



£417 million 



Total Benefit (PV) 



£2,087 million 



Other key non-monetised benefits by 'main affected groups': There will be a positive 
employment impact as a result of this policy. There is the benefit of higher economic output from 
additional employment. 



Key Assumptions/Sensitivities/Risks The number of customers to be migrated and assumptions on the 
impact of the WCA. 



Price Base 
Year 2009 


Time Period 
Years 5 


Net Benefit Range (npv) 
£ 


NET BENEFIT (NPV Best estimate) 

£818 million 



What is the geographic coverage of the policy/option? 


Great Britain 


On what date will the policy be implemented? 


October 2010 


Which organisation(s) will enforce the policy? 


N/A 


What is the total annual cost of enforcement for these organisations? 


£N/A 


Does enforcement comply with Hampton principles? 


Yes/No 


Will implementation go beyond minimum EU requirements? 


Yes/No 


What is the value of the proposed offsetting measure per year? 


£N/A 


What is the value of changes in greenhouse gas emissions? 


£N/A 


Will the proposal have a significant impact on competition? 


Yes/No 


Annual cost (£-£) per organisation 

(excluding one-off) 


Micro 


Small 


Medium 


Large 


Are any of these organisations exempt? 






N/A 


N/A 



Impact on Admin Burdens Baseline (2005 Prices) 
Increase of £ Decrease of £ 



Net Impact 



(Increase - Decrease) 
£ 



Key: 


Annual costs and benefits: Constant Prices 




(Net) Present Value 



80 



vidence Base (for summary sheets] 



[Use this space (with a recommended maximum of 30 pages) to set out the evidence, 
analysis and detailed narrative from which you have generated your policy options or 
proposal. Ensure that the information is organised in such a way as to explain clearly 
the summary information on the preceding pages of this form.] 

PROPOSED POLICY CHANGE 

1 . To migrate existing incapacity benefits customers to Employment and 
Support Allowance (ESA) from October 2010. 

2. Employment and Support Allowance was introduced for new customers 
on 27th October 2008. ESA is intended to be a combined benefit, bringing 
together the rules from Incapacity Benefit (IB) and Income Support (IS). 
Currently existing incapacity benefits customers can be on Incapacity 
Benefit (including former Invalidity Benefit customers), Severe Disablement 
Allowance and/or Income Support on the grounds of incapacity. By 
migrating these customers to ESA there will be a single benefit for those 
out of work due to illness or disability. 

What is the change in policy? 

3. The Welfare Reform White Paper, "Raising expectations and increasing 
support: reforming welfare for the future", published in December 2008, 
set out the intention to transfer all existing incapacity benefits customers 
to Employment and Support Allowance, using the robust and objective 
Work Capability Assessment (WCA) as a key assessment tool. 

4. Those who are eligible for ESA will automatically have their existing 
awards migrated to awards of ESA. There will be a higher rate of benefit 
for some people placed in the Support Group; transitional protection to 
ensure that no one sees a cash reduction in their benefit while ensuring 
alignment to ESA rates over time; and personalised support to help those 
in the Work Related Activity Group move into work. 

Reason for the change in policy 

5. Many incapacity benefits customers have been on benefits for a long 
time. Table One shows that 62% of existing incapacity benefits customers 
have durations of five years or more. These customers have had little 
support to get back towards work and they have effectively been written 
off in the past. 

6. The government wants to work with people to get them back into jobs 
and help them stay there which is beneficial for individuals, society and 
the economy 12 . Many people on incapacity benefits believe that they are 
unemployable, with no life choices or long-term prospects because they 



12 The Welfare Reform White Paper, "Raising expectations and increasing support: reforming 
welfare for the future", published in December 2008 



81 



do not think their illness or disability can be catered for in the workplace 13 . 
However, this is not the case - many people with such conditions are 
able to take up work, if the right support is in place. 

Table One: Duration of current claims for those on incapacity benefits 



Duration of current Number on incapacity Share of incapacity 
claim (days) benefits benefits caseload 


Up to 3 months 


12,160 


1% 


3 months up to 6 
months 


11,780 


1% 


6 months up to 1 year 


139,110 


6% 


1 year and up to 2 
years 


238,030 


10% 


2 years and up to 5 
years 


487,980 


21% 


5 years and over 


1,444,430 


62% 


Total 


2,333,490 


100% 



Source: Department of Work and Pensions Longitudinal Study May 2009 

7. The Work Capability Assessment (WCA) will ensure people receive the 
correct benefit. The WCA is a positive assessment that focuses on what a 
person remains capable of and identifies the help they need to overcome 
their problems and make a return to work. This will ensure existing 
incapacity benefit customers will receive the appropriate benefit and 
support to help them return to work. 

8. Also moving to just one benefit for those out of work due to illness or 
disability will be a major simplification to the benefit system and over time 
ensure people with the same circumstances are treated equally. 

Costs and Benefits 

9. The costs and benefits are outlined below; 
Costs 

• Administrative costs of migration (for example computer system, staff 
costs, training) to ensure the policy is delivered successfully; 

• Recurring administrative costs to maintain claims on ESA; 

• Costs of paying extra benefit to the poorest and most severely disabled 
people when they migrate including Housing Benefit and Council 
Tax Benefit; 



13 Katharine N, Davidson J, Sainsbury R 'Provider led Pathways: Experiences and views of 
early implementation' Department of Work and Pensions Research Report No. 595 



82 



Benefits 



Net benefit savings from those who are found fit for work when they 
are assessed using the WCA; 

Simplified benefit rates (including benefit savings from rate alignment 
for incapacity benefits); 

Increased financial support for the poorest and the most severely 
disabled people; 

Wider benefits of a simplified benefit system, with a single set of rates 
and rules reducing complexity; 

Increased numbers of people moving towards work and the wider 
fiscal benefits of people going into work; 

Reduced administration costs from operating just one system of 
support rather than two. 



Economic Costs 


Economic 


Fiscal Costs and 


Wider Benefits 




Benefits 


Benefits 16 




One off costs 


Reduced 


Costs of paying 


With more 


arising from 


administration 


extra benefit to the 


disabled people 


migrating existing 


costs from 


poorest and most 


returning to work 


customers to 


operating just one 


severely disabled 


as a result of this 


ESA (including 


system of support 


people when 


policy there will be 


computer system 


rather than two 


they migrate 


individual health 


costs) £288 million 


of £70 million 


£160 million 


benefits 


Recurrent 


There will 


Net benefit 




administrative 


be a positive 


savings from 




costs from 


employment 


those who are 




migrating existing 


impact as a result 


found fit for work 




customers to ESA 


of this policy. 


when they are 




of £34 million 


There is the 


assessed using 






benefit of higher 


the WCA of 






economic output 


£566 million 






from additional 








employment 17 







14 Note that reductions in fiscal costs could, in theory, be included both as an economic 
benefit (to the exchequer) and an economic cost (to the individual who no longer receives 
out-of-work benefits). The same applies in reverse for polices that involve increases in tax 
credits/benefits. These would cancel out exactly unless distributional weights were applied, 
and are not included in the tables to avoid confusion. 

15 A positive employment impact is expected as a result of applying personalised support 
to those in the Work Related Activity group, but these will be assessed separately. It is also 
anticipated that there will be a positive employment impact from those being found fit for work 
when they are assessed through the WCA- either directly or via Jobseekers Allowance. This 
effect is uncertain and has not been quantified. 



83 



Economic Costs Economic 
Benefits 



Fiscal Costs and Wider Benefits 
Benefits 16 



Net benefit 
savings from 
an alignment 
of benefit rates 
(including HB/ 
CTB) - net benefit 
of £369 million 

Net savings from 
aligning with ESA 
rules (including 
permitted work 
and linking rules) 
of £7 million 

Furthermore there 
will be gains from 
direct and indirect 
tax from those 
entering work 



10. All costs and benefits are presented as Net Present Values in 2009/10 prices, 
and include costs and benefits occurring between 2009/10 and 2013/14. 

11. The Economic Impact of the Policy (Net Present Value) is £818 million 
(excluding one-off costs). Positive number represents benefits. 

Numbers of people affected 

12. Table Two shows the breakdown of incapacity benefit customers by 
benefit type. The majority of customers are on either Incapacity Benefit 
or Incapacity Benefit and Income support. 

Table Two: The incapacity benefits caseload by benefit type 



Rate of Benefit 


No of Customers 


IB only 


835,000 


IB and IS only 


894,000 


Invalidity Benefit 


294,000 


SDAonly 


44,000 


SDAand IS 


151,000 


IB and Pension 
Credit 


116,000 


Total 


2,333,000 



Source: Department of Work and Pensions Longitudinal Study May 2009 



84 



13. It is estimated that around 1.5 million customers will be directly affected 
by migration. This is because since the introduction of ESA in October 
2008 there are no new claims to incapacity benefits apart from linked 
claims. As a result of expected off flows by October 2010, when migration 
starts there will be around 2 million customers still on incapacity benefits. 

14. Anybody who reaches State Pension age (65 for men, 60 rising to 62 for 
women) during the migration period will not be migrated to avoid potentially 
having to move benefit twice in a short period of time. This reduces the 
number to 1 .8 million people who will need to be migrated. 

15. Finally some people will naturally move off incapacity benefits before they 
go through migration which means that in total by the end of the process 
1.5 million will have been migrated. 

Work Capability Assessment 

16. The Work Capability Assessment will assign people to the right benefit, 
with the right support to move towards work. The Work Capability Assessment 
is a more positive assessment that focuses on what a person remains 
capable of and identifies the help they need to overcome their problems 
and make a return to work. 

17. There will be three possible outcomes from the Work Capability Assessment; 
i. Support Group in ESA 

ii. Work related activity group in ESA 
iii. Fit for work (not eligible for ESA) 

18. Although published statistics 16 on how the WCA is performing for new 
ESA customers show that 36 per cent of customers have been found fit 
for work, we estimate the proportion found fit for work will be lower for 
existing customers going through migration. This is because these 
customers will have been on benefit for at least two years and many will 
have already satisfied the Personality Capability Assessment (PCA) so 
are likely to have a more severe condition relative to new customers. 

1 9. Of the estimated 1 .5 million people who will be assessed using the WCA, 
it is estimated that around 15% will be found fit for work, 65% will be in 
the work related activity group and 20% of customers will be in the 
support group. This is based on evidence from those assessed using the 
PCA and applying WCA descriptors to PCA data to determine the likely 
numbers in each group. 



16 Employment and Support Allowance: Work Capability Assessment Statistical Release 
Febuary 2009 



85 



Customers assessed to be in the Support Group 

20. Customers who are placed in the Support Group on migration will be 
offered personalised support on a voluntary basis. In terms of ESA 
payable, they will immediately receive the support component; and those 
on a low income will automatically be entitled to the Enhanced Disability 
Premium. It is estimated that 65% of those entering the Support Group 
will gain financially on migration. For the remaining 35% where their 
current benefit is paid at a higher rate than their ESA entitlement, the 
amount of their current award will be protected on a transitional basis. 

21 . Customers who were previously entitled to Income Support and who 
become entitled to income related ESA will continue to be entitled to 
maximum eligible Housing Benefit (HB) and Council Tax Benefit (CTB). 
Customers receiving "standard" 17 HB/CTB who become entitled to 
income-related ESA will become entitled to maximum eligible HB/CTB. 
Those who continue to receive "standard" HB/CTB will see an increase 
in their overall benefit income. 

Customers assessed to be in the Work Related Activity Group 

22. Customers who are placed in the Work-Related Activity Group on migration 
will receive personalised support to help them move towards work. In 
terms of the ESA payable, they will immediately receive the work-related 
activity component. As with customers placed in the Support Group, if 
their current benefit is paid at a higher rate than their ESA entitlement, 
the amount of their current award will be protected on a transitional basis. 

23. Customers who are not receiving income-related ESA (and hence 
maximum eligible HB/CTB) and as a consequence continue to receive 
"standard" HB/CTB will have their HB/CTB protected so that they do not 
see a reduction in overall benefit income. 

Customers found fit for work by the WCA 

24. Customers who are found fit for work will have their entitlement to 
incapacity benefits ended and will be able to claim another benefit or 
appeal. Based on the outcomes of customers who do not satisfy the 
Personal Capability Assessment it is estimated that customers who are 
found fit for work will have the following destinations 18 : 

• 50% move onto Jobseekers Allowance. 

• 20% move on to another benefit (e.g. Income Support, Carers 
Allowance or re-claim ESA) 



17 Standard HB/CTB is calculated on the grounds that no other income-related benefit has 
been awarded because the customer's income is too high. In such circumstances the amount 
of HB/CTB will be based on the customer's family make up, their income and the amount of 
their rent and/or council tax liability and will usually be less than the maximum. 

18 Based on analysis of destinations observed for those leaving Incapacity Benefit after a 
Personal Capability Assessment 



86 



• 30% move off benefit. 

25. The government expects that some customers that are found fit for work 
will go back into work either directly or via JSA where they will receive 
intensive support to help them return to work. 

26. Customers who move to income-based Job Seekers Allowance or Income 
Support will be entitled to maximum eligible Housing Benefit / Council Tax 
Benefit. Those who are not entitled to any of the other income-related 
benefits, including those who move into work may continue to be entitled 
to "standard" 19 Housing Benefit / Council Tax Benefit. 

Rate alignment 

27. The process to align IB and ESA benefit rates has already begun by 
uprating IB customers with age additions by a lower amount than the ESA 
uprating. The cash increase in their overall benefit was in April 2009 half 
of the Rossi index. As explained in the White Paper "Raising expectations 
and increasing support: reforming welfare for the future", this has begun 
the process of achieving alignment with ESA but more gradually than 
previously planned. This mitigates any risk of existing claimants being 
disadvantaged whilst promoting an age neutral regime for the future. 

28. Those assessed to move to ESA by the WCA will be either in the Support 
Group or Work Related Activity Group. Of those moving on to ESA, some 
customers will have a benefit rate below the appropriate ESA rate. For 
these cases their benefit rate will be increased on migration to the level of 
the ESA rate. The government will ensure that no customer whose benefit 
rate is higher than the ESA rate will experience a cash reduction in their 
benefit on migration to ESA, by transitionally protecting their existing level 
of benefit. After that, it will be frozen until the ESA benefit rate catches up 
so that over time all customers on ESA are treated equally. 

Benefit rate increase 

29. Where, at the point of migration, a customer's current level of benefit is 
lower than their ESA rate, their benefit will immediately be increased to 
the ESA rate. 

Summary of customers that will see an increase in their benefit rate 

30. Some customers that are assessed to be in the Support group will 
receive an increase in their benefits. This includes contributory Incapacity 
Benefit claimants who do not receive additions and many of the poorest 
customers who receive Income Support. These customers have been 
assessed to have the most severe conditions. 



19 Standard HB/CTB is calculated on the grounds that no other income-related benefit has 
been awarded because the customer's income is too high. In such circumstances the amount 
of HB/CTB will be based on the customer's family make up, their income and the amount of 
their rent and/or council tax liability and will usually be less than the maximum. 



87 



31. Severe Disability Allowance (SDA) customers, who do not receive an 
income-related top-up to their benefit, receive lower rates of benefit and 
will gain on moving to ESA. 

Transitional protection 

32. Transitional protection will remain in place for those whose current benefit 
rate is higher than their ESA rate until 2020. 

Summary of customers that will have their benefits transitionally protected 

33. In ESA there are no age, adult or child dependency additions. Incapacity 
Benefit age or adult dependency additions can be up to £70 a week. 
These dependency allowances will be transitionally protected and these 
customers will see no cash reduction in the value of their benefit. 

34. Those receiving Income Support also receive the disability premium. This 
is not replicated in ESA. Those moving into the Work Related Activity 
Group will have a higher existing award than their ESA rate and will be 
transitionally protected. 

35. Couples on Income Support receive a higher benefit rate than under ESA 
due to the couple rate of the Disability Premium. This is not replicated in 
ESA. These claimants will be transitionally protected and see no cash 
reduction in their benefit. 

36. The majority of SDA claimants receive an Income Support top up and so 
are unlikely to see gains on migration to ESA unless placed in the support 
group. These customers will be transitionally protected. 

No change in benefit rates 

37. Contributory Incapacity Benefit customers that do not have additions 
will see neither any gains or have their benefit rate protected if they are 
assessed to be in the Work Related Activity Group. 

38. In addition some contributory Incapacity Benefit customers receiving 
lower age additions will also see neither any gains or have their benefit 
rate protected if they are assessed to be in the Support Group as their 
benefit rates will already have aligned before migration begins. 

ESA Rules 

39. Customers, who are eligible for ESA, will, upon migration, immediately 
become subject to, and able to benefit from, ESA rules when they migrate 
to ESA. 

40. Permitted work allows customers to try work up to a certain level of earnings 
before they lose their benefits. As part of aligning benefit rules and rates 
we intend to apply the permitted work rules in ESA to all customers 
successfully migrating from existing incapacity benefits. For contributory 
customers the permitted work rules are the same, but people previously 



88 



on Income Support paid on the grounds of incapacity will be able to keep 
£93 per week of their permitted work earnings compared to £20 per week 
currently. This is in keeping with the work-focussed ethos of ESAand will 
allow customers to try out work as a stepping-stone to returning to work. 
We expect there to be a positive employment effect from this measure. 

41. Contributory ESA customers and Incapacity Benefit customers who 
claimed after 2001 have half the amount of any income from occupational 
pension over £85 per week deducted from their contributory benefit. 
However Incapacity Benefit and Severe Disablement Allowance 
customers who claimed benefit prior to 2001 or are entitled to higher rate 
care component of DLA have any occupational pension fully disregarded. 
If on migration to ESA we apply ESA rules to these customers, those 
with occupational pensions over £85 per week could see a significant 
reduction in their benefit. Therefore to ensure that customers do not 

see a reduction in their benefit on migration the occupational pensions 
disregard will be carried forward into ESA for customers who currently 
have any occupational pension disregarded. This will mean that there will 
be different rules for the treatment of occupational pension in ESA until 
there are no customers with an occupational pension disregard remaining 
on ESA. This will protect the level of benefit for up to 30,000 people. 

42. People who were claiming Invalidity Benefit (IVB) and Severe Disablement 
Allowance (SDA) are not currently liable to income tax on that portion 

of their income. Following migration to contributory ESA all customers, 
including those previously receiving tax-exempt Incapacity Benefits, 
will be liable to income tax on their ESA in the same way as new ESA 
customers. By the end of the migration period an estimated 50,000 
customers will have an increased taxation liability. People migrated to 
income-related ESA should be exempt from income tax on this portion 
of their income in the same way as new income-related ESA customers. 

Support to return to work 

43. Those customers that are in the Work Related activity group will receive 
support to help them return to work. The requirements to engage with 
back to work support help will be covered by separate regulations and the 
costs and benefits will be assessed in a separate impact assessment. 

EQUALITY IMPACT ASSESSMENT 

Gender 

44. Currently there are 1.35 million men claiming existing incapacity benefits 
and just under 1 million women. This means that men make up around 58 
per cent of the caseload. However this varies by type of incapacity benefit 
received as shown in Table Three. For example, 62% of contributory 
Incapacity Benefit customers are men, compared to 50% of SDA customers. 



89 



Table Three: Incapacity Benefits customers by Gender 



Benefit 


Men 


Women 


% Men 


% Women 


Incapacity Benefit 


767,000 


468,000 


62% 


38% 


Income Support 


482,000 


412,000 


54% 


46% 


SDA 


101,000 


102,000 


50% 


50% 


Total 


1,350,000 


982,000 


58% 


42% 



Source: Department of Work and Pensions Longitudinal Study May 2009 

45. As men make up the majority of people on contributory Incapacity Benefit 
they are more likely to be in receipt of an age addition and adult dependency 
increase than women. Indeed a higher proportion of all men on IB receive 
more than £150 per week compared to women. 

Table Four: Incapacity Benefit customers by benefit amount and gender 



IB rate 


Women 


Men 


Women % 


Men % 


Under £20.00 


200 


500 


0% 


0% 


£20.00 to under 
£40.00 


200 


500 


0% 


0% 


£40.00 to under 
£60.00 


100 


300 


0% 


0% 


£60.00 to under 
£80.00 


1,000 


2,000 


0% 


0% 


£80.00 to under 
£100.00 


276,000 


444,000 


59% 


58% 


£100.00 to under 
£150.00 


189,000 


292,000 


40% 


38% 


£150.00 and over 


1,000 


27,000 


0% 


4% 


Total 


469,000 


767,000 


100% 


100% 



Source: Department of Work and Pensions Longitudinal Study May 2009 

46. This represents a risk that rate alignment proposals could disproportionately 
affect men. However the provision of transitional protection will help 
mitigate this risk. As men and women represent an equal share of SDA 
customers, they are equally likely to benefit from the higher benefit rates 
in ESA for those not receiving an income-related top up. 

47. The differing proportions can in part be explained by the unequal state 
pension ages as, other than SDA, incapacity benefits are working age 
benefits. However state pension ages are being aligned between 2010 
and 2020, and this may help to address the gender imbalance. 



90 



Work Capability Assessment 

48. Administration of the Work Capability Assessment does entail some 
risk that customers may be treated differently because of their gender. 
Individuals may feel vulnerable if required to participate in an assessment 
carried out by a healthcare professional of the opposite gender, or that 
their gender makes them exposed to discrimination. In mitigation of the 
risk healthcare professionals are contractually required to meet all requests 
for medical assessments to be carried out by healthcare professionals of 
the same sex on cultural or religious grounds. They must also adhere to 
all requests for the presence of a third party during assessments. Random 
samples of customers are provided with feedback forms in which they are 
able to comment on their assessment and raise any issue of concern. 
The complaints procedure also provides a mechanism to identify and 
monitor discrimination. Whist in general we anticipate no discrimination in 
the WCA process, all healthcare professionals will receive training on the 
Gender Equality Duty, which offers an opportunity to raise awareness 
about gender issues amongst those administrating the WCA. 

Housing Benefit and Council Tax Benefit 

49. Housing Benefit and Council Tax Benefit are available to all the equality 
groups, regardless of gender. 20 The calculation of the amount of Housing 
Benefit and Council Tax Benefit is based on a means test and an 
assessment of eligible rent / council tax. Gender is not considered in the 
calculation. Approximately 60% of both Housing Benefit and Council Tax 
Benefit working age recipients are women 21 . 

50. Anyone receiving Housing Benefit and Council Tax Benefit at the point of 
migration will not see a reduction in overall benefit income as a result of 
migration due to transitional protection in Housing Benefit and Council 
Tax Benefit. This mitigates the risk that any group will be disproportionately 
negatively affected. Customers who are entitled to Income Support and 
who become entitled to income-related ESA will continue to be entitled to 
maximum eligible Housing Benefit and Council Tax Benefit. We do not 
expect that the different outcomes will be disproportionately spread across 
men or women in receipt of Housing Benefit and Council Tax Benefit. 

Disability 

51. The reforms to incapacity benefits are designed to help disabled people 
and people with health conditions move into work, with improved financial 
support for those for whom preparation to return to work would be 
unreasonable. As such the policy aims to promote equality of opportunity. 



20 This is in contrast to certain other benefits which are targeted to those unable to work or 
those of a certain age group. 

21 Based on three years of Family Resources Survey data (2005/6 to 2007/8). Gender refers 
to the head of the benefit unit. Working age is defined as the head of the benefit unit being 
under 60 years old 



91 



52. Most incapacity benefits customers are likely to be covered by the 

Disability Discrimination Act (DDA) and so these reforms have considerable 
significance for disabled people. The table below shows the distribution 
of incapacity benefits customers by medical condition, with mental and 
behavioural conditions being the most common. 

Table Five: Incapacity Benefits customers by medical condition 



Medical Condition Share of the incapacity 

benefits caseload 


Mental and Behavioural Disorders 


43% 


Diseases of the Nervous System 


7% 


Diseases of the Circulatory or 
Respiratory System 


7% 


Diseases of the Musculoskeletal 
system and Connective Tissue 


17% 


Injury, Poisoning and certain other 
consequences of external causes 


5% 


Other 


21% 


Total 


100% 



Source: Department of Work and Pensions Longitudinal Study February 2009 

53. The rates of benefit paid to people on ESA do not vary because of disability. 
It is the effect of disability that matters. In ESA the most severely disabled 
people are assisted through higher benefit rates in the support group. 

Work Capability Assessment 

54. By using the WCAto assess eligibility to ESA for existing customers, all 
disabled people and those with health conditions who are out of work will 
be treated equally. The medical assessment is based on the severity of 
functional limitation caused by a condition; not on the basis of the condition 
itself, because different people may be affected in different ways by the 
same condition. However previous consultation has highlighted concern 
that those with fluctuating conditions of mental health problems may face 
undue barriers in receiving their entitlement, representing a potential risk. 
To mitigate these risks, the WCA has been designed to take account of 
fluctuating conditions, assessing a customer's capability over time. 
Unless an individual is capable of an activity that is carried out reliably 
and repeatedly over a sustained period of time, they are considered 
unable to carry it out at all. The healthcare professionals carrying out of 
the assessments also receive specific training on assessing those with 
mental health conditions. As with all customers, the legal right of appeal 
remains if an individual feels that they have been unfairly assessed. To 
mitigate any risk that sanctions may have a disproportionate effect, 
especially on those with mental health conditions and learning difficulties, 
there are facilities which allow good cause to be applied by the personal 
advisor in cases of failure to attend a Work Capability Assessment. 



92 



Jobseeker's Allowance and Health conditions 

55. The refreshed Jobseeker's Allowance regime and Flexible New Deal 
are designed to offer personalised, tailored support to customers. This 
includes the needs of customers with a health condition or disability who 
will get more intensive support as they progress through their claim to 
help overcome related barriers to work. 

56. Customers on Jobseeker's Allowance with a health condition may restrict 
their availability for work provided those restrictions are "reasonable" 
given their condition, be fast tracked to the point in the customer journey 
where additional support becomes available and receive specialist 
disability services from the Disability Employment Adviser network. 

Housing Benefit and Council Tax Benefit 

57. Housing Benefit and Council Tax Benefit are available to all the equality 
groups, regardless of disability. The calculation of the amount of Housing 
Benefit and Council Tax Benefit is based on a means test and an 
assessment of eligible rent/council tax. The increased income premium 
and allowances used in the Housing Benefit and Council Tax Benefit 
assessment are more generous for disabled people, to reflect the 
additional costs incurred in their day-to-day living expenses. 

58. Anyone receiving Housing Benefit and Council Tax Benefit at the point of 
migration will not see a reduction in overall benefit income as a result of 
migration due to transitional protection in Housing Benefit and Council Tax 
Benefit. This mitigates the risk that any group will be disproportionately 
negatively affected. Customers who are entitled to Income Support and 
who become entitled to income-related ESA will continue to be entitled to 
maximum eligible Housing Benefit and Council Tax Benefit. Some of 
those with the most severe health conditions who are assigned to be in 
the support group will see an increase in their Housing Benefit and 
Council Tax Benefit award. 

Ethnicity 

59. The rate of benefit paid to people on incapacity benefits or ESA does not 
vary because of race or culture. There is a low risk that ethnic minorities could 
be disproportionately affected by the rate alignment measures, as survey 
evidence indicates that there is a lower proportion of ethnic minorities on 
incapacity benefits (6%) relative to the working age ethnic minority population 
as a whole (12%). 



93 



Table Six: Proportion of incapacity benefits customers by ethnicity 



Incapacity Working Age 
Ethnicity benefits Population 


White 


94% 


88% 


Ethnic minority 


6% 


12% 



Source: Based on the Family Resources survey 2007/08 
Work Capability Assessment 

60. The Work Capability Assessment (WCA) will not apply differently to 
people of different races or cultures. The Healthcare professionals 
carrying out the assessment will neither be provided with, nor ask the 
customers their ethnicity thus facilitating uniformity in the application of 
the assessment to all applicants for ESA irrespective of their ethnicity. 
However there is a potential risk of racial discrimination on a case by 
case basis in the course of the assessment itself. The presence of a 
language barrier may also make it difficult for applicants to convey their 
health problems and challenges to entering work. In order to mitigate 
these risks, healthcare professionals will ensure that an interpreter is 
always available if requested when the appointment is made. Those 
involved in all stages of the process will receive training on the Race 
Equality Duty, while a specific training course on multi-cultural awareness 
is also provided for all new and existing Healthcare professionals 
undertaking work for the Department for Work and Pensions. 

Housing Benefit and Council Tax Benefit 

61. Housing Benefit and Council Tax Benefit are available to all the equality 
groups, regardless of ethnicity. The rules do not distinguish between the 
ethnicity of the customer. The calculation of the amount of Housing Benefit 
and Council Tax Benefit is based on a means test and an assessment of 
eligible rent / council tax. Ethnicity is not considered for the purpose of 
this calculation but as Housing Benefit and Council Tax Benefit are 
income-related benefits, we may observe a different pattern for ethnic 
groups reflecting differences in income levels and benefits take-up. 

62. Anyone receiving Housing Benefit and Council Tax Benefit at the point of 
migration will not see a reduction in overall benefit income as a result of 
migration due to transitional protection in Housing Benefit and Council 
Tax Benefit. This mitigates the risk that any group will be disproportionately 
negatively affected. Customers who are entitled to Income Support and 
who become entitled to income-related ESA will continue to be entitled to 
maximum eligible Housing Benefit and Council Tax Benefit. We do not 
expect that the different outcomes will be disproportionately spread 
across the different ethnic groups in receipt of Housing Benefit and 
Council Tax Benefit. 



94 



63. For the Housing Benefit and Council Tax Benefit populations as a whole, 
Table seven presents a breakdown of the working age Housing Benefit 
and Council Tax Benefit populations by ethnicity. The proportion of people 
from an ethnic minority on Housing Benefit is similar to the proportion of 
all renters from an ethnic minority. The proportion of people on Council 
Tax Benefit from an ethnic minority is slightly higher than the proportion 
of people with a Council Tax liability from an ethnic minority. 

Table Seven: Proportion of Housing Benefit and Council Tax Benefit 
customers by ethnicity 



Ethnicity 


All working 
age on HB 


All working 
age renters 


All working 
age on CTB 


All working 

age Council 

Tax liable 


White 


86% 


85% 


84% 


89% 


Ethnic minority 


14% 


15% 


16% 


11% 



Notes: Based on three years of Family Resources Survey data (2005/6 to 2007/8). Ethnicity 
refers to ethnicity of the head of the benefit unit. Working age is defined as the head of the 
benefit unit being under 60 years old. 

Age 

64. Nearly half of customers claiming incapacity benefits are over the age of 50. 
This is because older people are more likely to have a disability or health 
condition and may also reflect labour market factors such as the decline 
of traditional manufacturing industry. However, this does not mean that 
they do not want or are unable to work. The government is committed to 
promoting employment prospects for older people, indeed for people of 
all ages, with and without health conditions. The proposed measures to 
increase support to help customers back to work will contribute to this 
and will work towards meeting the Government's aim of getting one 
million people off incapacity benefits. 

Table Eight: Incapacity Benefits Customers by Age 



Age Percentage of incapacity 
benefit customers 


16-17 


0% 


18-24 


5% 


25-34 


12% 


35-44 


22% 


45-49 


14% 


50-54 


15% 


55-59 


19% 


60-64 


12% 


Total 


100% 



Source Department of Work and Pensions Longitudinal Study May 2009 

95 



65. The amount of incapacity benefits received for existing customers can 
vary by age as age additions are payable. Under IB age additions are 
payable after a year of incapacity. There are two rates; £17.10 for those 
whose incapacity began before the age of 35 and £8.55 for those whose 
incapacity began between 35 and 45. These additions were originally 
intended to compensate those whose incapacity began at an early stage 
in life (for example, the young man very badly injured in a workplace 
accident), for the potentially high loss of possible future earnings, due to 
the assumption that they were unlikely to return to work. ESA does not 
carry forward the additions. After the assessment phase ESA is age 
neutral. However those receiving age additions within their existing 
benefit will have the cash level of their benefit protected. 

Table Nine: IB caseload by benefit amount and age 



Aged 
IB rate Under 50 Aged 50+ Total 


Under £60.00 


0% 


0% 


0% 


£60.00 to under £80.00 


1% 


0% 


0% 


£80.00 to under £100.00 


38% 


74% 


58% 


£100.00 to under 
£150.00 


60% 


23% 


39% 


£150.00 and over 


1% 


3% 


2% 


Total 


100% 


100% 


100% 



Source Department of Work and Pensions Longitudinal Study May 2009 

66. Table Nine shows that customers aged 50 or over are more likely to have 
a rate of benefit below £100 per week than those aged under 50. There 
is a risk then that customers aged under 50 may be disproportionately 
affected by rate alignment. In contrast customers aged 50 or over are 
slightly more likely to have a benefit rate of £150 per week or more so 
these customers may be more affected by rate alignment. However 
transitional protection will ensure those moving to ESA will not see a 
cash reduction in their benefit income. This will mitigate the risks of 
different groups being disproportionately affected. 

Work Capability Assessment 

67. The Work Capability Assessment will be applied uniformly to individuals 
from all age groups and we do not envisage any discrimination on these 
grounds. Any potential risk stems from the possibility of discrimination on 
a case by case basis in the course of the assessment itself. To mitigate 
this risk, robust complaints and quality-assurance procedures enable 
healthcare professionals to be monitored to ensure that age discrimination 
is not taking place. Decisions on entitlement to benefit are taken by 
separate decision makers and customers have a right of appeal to an 
independent appeal tribunal if they do not agree with the decision. 



96 



Housing Benefit and Council Tax Benefit 

68. Housing Benefit and Council Tax Benefit are available to all the equality 
groups, regardless of age. 

69. For working age customers, anyone receiving Housing Benefit and 
Council Tax Benefit at the point of migration will not see a reduction in 
overall benefit income as a result of migration due to transitional protection 
in Housing Benefit and Council Tax Benefit. This mitigates the risk that any 
group will be disproportionately negatively affected. Customers who are 
entitled to Income Support and who become entitled to income-related 
ESA will continue to be entitled to maximum eligible Housing Benefit and 
Council Tax Benefit. The different outcomes will be disproportionately 
spread across the different working age groups in receipt of Housing 
Benefit and Council Tax Benefit. 

70. Cases assessed under the Housing Benefit and Council Tax Benefit 
provisions for people who have reached the qualifying age for Pension 
Credit do not receive amounts in respect of disability or ESA components. 
Therefore no protection is needed for them in Housing Benefit and Council 
Tax Benefit. Even if their ESA entitlement is higher than their Incapacity 
Benefit, current rules mean their overall benefit income will not reduce. 

71. Table Ten shows the breakdown of working age Housing Benefit and 
Council Tax Benefit customers by age. This shows that the percentage 
of people aged 45 or over on Housing Benefit and Council Tax Benefit is 
higher than the percentage of all renters of this age group. 

Table Ten: Housing Benefit and Council Tax Benefit recipients by age 



All working All working All working All working 
age on HB age renters age on age CT 

CTB liable 


Age under 25 


13% 


21% 


11% 


19% 


Age 25 to 34 


21% 


28% 


19% 


21% 


Age 35 to 44 


26% 


23% 


25% 


23% 


Age 45 to 54 


20% 


16% 


21% 


20% 


Age 55 to 59 


9% 


7% 


11% 


10% 


Age 60 to 64 


10% 


6% 


13% 


8% 


Total (aged less 
than 65) 


100% 


100% 


100% 


100% 



Notes: Based on three years of Family Resources Survey data (2005/6 to 2007/8). Working 
age refers to the head of the benefit unit being aged under 65 years old. In the final column, 
all households include only those liable to pay council tax. 



97 



State Pension age during migration 

72. The government will not migrate people who will reach State Pension age 
during the migration period (before April 2014). This will ensure that they 
do not have to change benefits twice in potentially a short period of time. 
An estimated 160,000 incapacity benefits customers reach State Pension 
age across the period (11%). 

Sexual orientation 

73. There is no evidence of and the government does not envisage any 
unequal treatment on these grounds 

Religious beliefs 

74. There is no evidence of and the government does not envisage any 
unequal treatment on these grounds 

Human rights 

75. There is no evidence of and the government does not envisage any 
unequal treatment on these grounds. 

Child poverty impact assessment 

76. Migrating incapacity benefits customers to ESA is intended to reduce 
poverty by supporting people into work and providing greater support to 
the most severely disabled. Providing transitional protection will ensure 
that customers do not see a cash reduction in their benefit, mitigating the 
risk of rate alignment having an adverse impact on poverty. About one in 
six of those claiming incapacity benefits have dependent children. The 
proposals will have a negligible affect on the relative child poverty measure 
due to the relatively small number of existing claimants with children. 

Rural impact assessment 

77. No adverse effect is expected on incapacity benefits customers living in 
rural areas. It is estimated that in England less than 20% of incapacity 
benefits customers live in rural areas which is less than the proportion for 
the population as a whole. Customers that have to travel large distances 
for their Work Capability Assessment will be reimbursed for their travel 
costs and any additional information required to migrate customers to 
ESA will be obtained over the phone and by post, mitigating disruption 
for customers in rural areas. 



98 



pecific Impact Tests: 



Use the table below to demonstrate how broadly you have considered the 
potential impacts of your policy options. 

Ensure that the results of any tests that impact on the cost-benefit 
analysis are contained within the main evidence base; other results 
may be annexed. 



Type of testing undertaken Results in Results 

Evidence annexed? 
Base? 


Competition Assessment 


No 


No 


Small Firms Impact Test 


No 


No 


Legal Aid 


No 


No 


Sustainable Development 


No 


No 


Carbon Assessment 


No 


No 


Other Environment 


No 


No 


Health Impact Assessment 


No 


No 


Race Equality 


Yes 


No 


Disability Equality 


Yes 


No 


Gender Equality 


Yes 


No 


Human Rights 


No 


No 


Rural Proofing 


Yes 


No 



99 



Annex B - Severe Disablement Allowance 

Severe Disablement Allowance is a non-contributory, non-income-related 
benefit payable to people aged 16-65 who are incapable of work who did not 
qualify for Incapacity Benefit. It is paid at a rate of £57.45 per week compared 
to £89.80 for Incapacity Benefit. This means in many cases that Severe 
Disablement Allowance has to be topped up by Income Support. 

Severe Disablement Allowance was payable to people until April 2001, when 
it was replaced by the new more generous Incapacity Benefit youth provisions. 
The new provisions mean that young people aged under20 (up to 25 for 
certain young people in education or training) could qualify for contributory 
Incapacity Benefit, without having to meet the normal National Insurance 
contribution conditions. Severe Disablement Allowance remained in payment, 
although it was closed to brand new claims. 

There are 244,000 Severe Disablement Allowance recipients of which 203,000 
are of working age. It is now planned to migrate these customers to contributory 
Employment and Support Allowance. However, it will not be possible to do so 
for those customers who are over state pension age as Employment and 
Support Allowance is only payable to working age people. Severe Disablement 
Allowance will therefore continue for people over pension age. 



100 



Annex C - Conversion from IB to ESA(C) 

There are seven examples that show when customers could be better or 
worse off when converted to ESA and the effects of protecting the HB/CTB 
applicable amount. 

Example 1 - single customer where IB is more than ESA(C) 

Example 2 - single customer where IB is less than ESA(C), customer has a 
pension meaning ESA(IR) is not payable 

Example 3 - Single customer IB less than ESA(C), customer has the highest 
rate of Disability Living Allowance (DLA) meaning they are entitled to the 
Enhanced Disability Premium (EDP). Customer also has a pension meaning 
ESA(IR) not payable 

Example 4 - single customer IB less than ESA(C) customer has pension and 
Disability Living Allowance 

Example 5 - couple, IB more than ESA 

Example 6 - Couple ESA more than IB, partner has earnings meaning 
ESA(IR) is not payable 

Example 7 - Couple enhanced disability premium (EDP) already awarded 
because the customer has highest rate care component of Disability Living 
Allowance (DLA). The partner is working and is registered as blind (this brings 
entitlement to the couple rate disability premium) 



101 



Example 1 - Single customer IB more than ESA(C) 



Income 




HB/CTB 




Long term IB 


£89.80 


Personal Allowance 


£64.30 


Age addition 


£6.55 


Disability Premium 


£27.50 


Total 


£96.35 


Total 


£91.80 






Less income 


£96.35 






Excess 


£4.55 



HB would be reduced by £4.55 x 65% = £2.96 
CTB would be reduced by £4.55 x 20% = £0.91 

Claim converted work related activity component (WRAC) awarded 



Income 



HB/CTB 



ESA(C) basic 


£64.30 


Personal Allowance 


£64.30 


WRAC 


£25.50 


WRAC 


£25.50 


Transitional 








Addition 


£6.55 






Total 


£96.35 


Total 


£89.80 






Less income 


£96.35 






Excess 


£6.55 



Income remains the same but: 

• HB would be reduced by £6.55 x 65% = £4.26 

• CTB would be reduced by £6.55 x 20% = £1 .31 
HB falls by £1.30 

CTB falls by £0.40 total reduction £1.70. 

Adding a transitional addition to the applicable amount of £2.00 (the difference 
between the Disability Premium and the WRAC) would restore the level of HB/CTB 

Claim converted support component (SC) awarded 



Income 




HB/CTB 




ESA(C) basic 


£64.30 


Personal Allowance £64.30 


SC 


£30.85 


SC 


£30.85 


Transitional 








Addition 


£1.20 


EDP 


£13.40 


Total 


£96.35 


Total 


£108.55 






Less income 


£96.35 






No excess 


full HB/CTB 



Because the customer is entitled to the support component he/she will also 
be entitled to the enhanced disability premium (EDP) meaning he/she will be 
better off and no transitional addition would be required. 



102 



Example 2 - Single customer IB less than ESA(C) customer has a 
pension meaning ESA(IR) not payable 



Income 




HB/CTB 




Long term IB 


£89.80 


Personal Allowance 


£64.30 


Pension 


£40.00 


Disability Premium 


£27.50 


Total 


£129.80 


Total 


£91.80 






Less income 


£129.80 






Excess 


£38.00 



HB reduced by £38 x 65% = £24.70 
CTB reduced by £38 x 20% = 7.60 

Claim converted support component (SC) awarded (it must be the SC 
because the total of basic ESA(C) and the work-related activity component 
would not exceed the rate of IB) 



Income 




HB/CTB 




ESA(C) basic 


£64.30 


Personal Allowance 


£64.30 


SC 


£30.85 


SC 


£30.85 


Pension 


£40.00 


EDP 


£13.40 


Total 


£135.15 


Total 


£108.55 






Less income 


£135.85 






Excess 


£27.30 



HB reduced by £27.30 x 65% = £17.74 
CTB reduced by £27.30 x 20% = £5.46 

Customer £9.10 a week better off. This is because the value of the support 
component and the enhanced disability premium (EDP) is higher than the 
disability premium. No transitional addition would be required. 



103 



Example 3 - Single customer IB less than ESA(C), customer has the 
highest rate of Disability Living Allowance (DLA) meaning they are entitled 
to the Enhanced Disability Premium (EDP). Customer also has a pension 
meaning ESA(IR) not payable 



Income 

Long term IB 
Pension 



Total 



£89.80 
£40.00 



£129.80 



HB/CTB 




Personal Allowance 


£64.30 


Disability Premium 


£27.50 


DLA (fully disregarded) 




EDP 


£13.40 


Total 


£105.20 


Less income 


£129.80 


Excess 


£24.60 



HB reduced by £24.60 x 65% = £15.99 
CTB reduced by £24.60 x 20% = £4.92 

Claim converted support component (SC) awarded (it must be the SC 
because the total of basic ESA(C) and the work-related activity component 
would not exceed the rate of IB) 



Income 



HB/CTB 



ESA(C) basic 


£64.30 


Personal Allowance 


£64.30 


SC 


£30.85 


SC 


£30.85 


Pension 


£40.00 


EDP 

DLA(fully disregarded) 


£13.40 


Total 


£135.15 


Total 


£108.55 






Less income 


£135.85 






Excess 


£27.30 



HB reduced by £27.30 x 65% = £17.74 
CTB reduced by £27.30 x 20% = £5.46 

The customer's weekly HB would fall by £1 .75 and the CTB would fall by 
£0.54 - total £2.29. This is because, whilst the applicable amount has 
increased by £3.35, the weekly income has increased by £5.35. Overall the 
customer is £3.06 (£5.35 - £2.29) a week better off and would not need a 
transitional addition to protect their level of HB/CTB. 



104 



Example 4 - single customer IB less than ESA(C) customer has pension 
and Disability Living Allowance 



Income 




HB/CTB 




Short term IB 


£80.15 


Personal Allowance 


£64.30 


Pension 


£40.00 


Disability Premium 


£27.50 


Total 


£120.15 


Total 


£91.80 






Less income 


£120.15 






Excess 


£28.35 



HB reduced by £28.35 x 65% = £18.43 
CTB reduced by £28.35 x 20% = £5.67 
Total £24.10 

Claim converted work-related activity component (WRAC) awarded 

Income HB/CTB 



ESA(C) basic 


£64.30 


Personal Allowance 


£64.30 


WRAC 


£25.50 


WRAC 


£25.50 


Pension 


£40.00 






Total 


£129.80 


Total 


£89.80 






Less income 


£129.80 






Excess 


£40.00 



HB reduced by £40 x 65% = £26.00 
CTB reduced by £40 x 20% = £8.00 
Total £34.00 

Income increased by £9.65 HB/CTB reduced by £9.90 therefore customer 
25p a week worse off. Adding a transitional addition of £2.00 a week to the 
applicable amount (the difference between the Disability Premium and the 
WRAC) would prevent the customer from losing out overall. 



Claim converted SC awarded 



Income 



HB/CTB 



ESA(C) basic 


£64.30 


Personal Allowance 


£64.30 


SC 


£30.85 


SC 


£30.85 


Pension 


£40.00 


EDP 


£13.40 


Total 


£135.15 


Total 


£108.55 






Less income 


£129.80 






Excess 


£26.60 



HB reduced by £26.60 x 65% = £17.29 
CTB reduced by £26.60 x 20% = £5.32 
Total £22.61 

Customer's HB/CTB would increase by £1 .49. This is because the value of 
the support component and the enhanced disability premium (EDP) is higher 
than the disability premium. No transitional addition would be required. 
Overall, weekly income increases by £11.14 (£9.65 and £1.49). 

105 



Example 5 - couple, IB more than ESA 

Income HB/CTB 



Long term IB 


£89.80 


Personal Allowance 


£100.95 


Adult Dependant 


£41.35 


Disability Premium 


£39.15 


Increase Age 








Addition 


£15.65 






Total 


£146.80 


Total 


£140.10 






Less income 


£146.80 






Excess 


£6.70 



HB reduced by £6.70 x 65% = £4.36 
CTB reduced by £6.70 x 20% = £1 .34 
Total £5.70 

Claim converted, work-related activity component (WRAC) awarded 



Income 




HB/CTB 




ESA(C) basic 


£64.30 


Personal Allowance 


£100.95 


WRAC 


£25.50 


WRAC 


£25.50 


Transitional 








Addition 


£57.00 






Total 


£146.80 


Total 


£126.45 






Less income 


£146.80 






Excess 


£20.35 



HB reduced by £20.35 x 65% = £13.23 
CTB reduced by £20.35 x 20% = £4.07 
Total £17.30 

Customer worse off by £11 .60 a week. This is because the couple rate 
disability premium has a higher value than the WRAC. Transitional Protection 
of £13.65 a week (the difference between the Disability Premium and the 
WRAC) added to the applicable amount would restore the level of HB/CTB 

Claim converted support component (SC) awarded 



Income 




HB/CTB 




ESA(C) basic 


£64.30 


Personal Allowance 


£100.95 


SC 


£30.85 


SC 


£30.85 


Transitional 








Addition 


£51.65 


EDP 


£19.30 


Total 


£146.80 


Total 


£151.10 






Less income 


£146.80 






No excess 





Full HB/CTB, customer £5.70 a week better off. This is because the value of 
the support component and the enhanced disability premium (EDP) is higher 
than the disability premium. No transitional addition would be required. 



106 



Example 6 - Couple ESA more than IB, partner has earnings 



Income 




HB/CTB 




Long term IB 


£89.80 


Personal Allowance 


£100.95 


Earnings 


£80.00 

(following 

disregard) 


Disability Premium 


£39.15 


Total 


£169.80 


Total 


£140.10 






Less income 


£169.80 






Excess 


£29.70 



HB reduced by £29.70 x 65% = £19.31 
CTB reduced by £29.70 x 20% = £5.94 
Total £25.25 

Claim converted support component (SC) awarded (must be SC as the 
total of basic ESA and the work-related activity component would not 
exceed IB) 



Income 




HB/CTB 




ESA(C) basic 


£64.30 


Personal Allowance 


£100.95 


SC 


£30.85 


SC 


£30.85 


Earnings 


£80.00 

(following 

disregard) 


EDP 


£19.30 


Total 


£175.15 


Total 


£151.10 






Less income 


£175.15 






Excess 


£24.05 



HB reduced by £24.05 x 65% = £15.63 
CTB reduced by £24.05 x 20% = £4.81 
Total £20.44 

Customer better off in HB/CTB by £25.25 - £20.44 = £4.81 

Customer better of on ESA by £95.15 - £89.80 = £5.35 

Weekly Total £10.16 

No transitional addition would be required. 



107 



Example 7 - Couple enhanced disability premium (EDP) already awarded 
because the customer has highest rate care component of Disability 
Living Allowance (DLA). The partner is working and is registered as 
blind (this brings entitlement to the couple rate disability premium) 



Income 




HB/CTB 




Long term IB 


£89.80 


Personal Allowance 


£100.95 


Adult Dependant 








Increase 


£41.35 


Disability Premium 


£39.15 


Age Addition 


£15.65 


EDP 


£19.30 


Earnings 


£40.00 








Total 


£186.80 


Total 


£159.40 












Less income 


£186.80 






Excess 


£27.40 



HB reduced by £27.40 x 65% = £17.81 
CTB reduced by £27.40 x 20% = £5.48 
Total £23.29 

Claim converted support component (SC) awarded 



Income 



HB/CTB 



ESA(C) basic 


£64.30 


Personal Allowance 


£100.95 


SC 


£30.85 


SC 


£30.85 


Transitional 








Addition 


£51.65 






Earnings 


£40.00 


EDP 


£19.30 


Total 


£186.80 


Total 


£151.10 






Less income 


£186.80 






Excess 


£35.70 



HB reduced by £35.70 x 65% = £23.21 
CTB reduced by £35.70 x 20% = £7.14 
Total £ 30.35 

Customer £7.06 a week worse off. This is because the couple rate disability 
premium has a higher value than the SC and the couple were entitled to the 
EDP prior to conversion to ESA. A transitional addition of £8.30 (the difference 
between the couple rate Disability Premium and the support component ) 
added to the applicable amount would restore the level of HB/CTB. 



108 



Annex D - Keeling version of the regulations as amended 22 
The Housing Benefit Regulations 2006 (SI 2006/213) 

22 Applicable amounts 

Subject to regulations 23, 24, 80 and 81 and Schedule A1 (polygamous 
marriages, patients, calculation of weekly amounts, rent free periods and 
treatment of claims for housing benefit by refugees), a claimant's weekly 
applicable amount shall be the aggregate of such of the following amounts 
as may apply in his case - 

(a) an amount in respect of himself or, if he is a member of a couple, 

an amount in respect of both of them, determined in accordance with 
paragraph 1(1 ), (2) or (3), as the case may be, of Schedule 3; 

(b) an amount determined in accordance with paragraph 2 of Schedule 3 
in respect of any child or young person who is a member of his family; 

(c) if he is a member of a family of which at least one member is a child 
or young person, an amount determined in accordance with Part 2 of 
Schedule 3 (family premium); 

(d) the amount of any premiums which may be applicable to him, 
determined in accordance with Parts 3 and 4 of Schedule 3 (premiums); 

(e) the amount of either the - 

(i) work-related activity component; or 

(ii) support component, 

which may be applicable to him in accordance with Part 5 of Schedule 3 
(the components); 

(f) the amount of any transitional addition which may be applicable 
to him in accordance with Parts 7 and 8 of Schedule 3 
(transitional addition). 

23 Polygamous marriages 

Subject to regulations 24, 80 and 81 and Schedule A1 (patients, calculation of 
weekly amounts, rent free periods and treatment of claims for housing benefit 
by refugees), where a claimant is a member of a polygamous marriage, his 
weekly applicable amount shall be the aggregate of such of the following 
amounts as may apply in his case - 



22 insertions are shown in bold italics; provisions within regulations that are unaffected by 
the amendments are omitted, unless needed to enable the effect to be understood; For the 
changes to the HB and CTB regulations, only the changes to HB version have been included 
as the CTB versions are the same. 



109 



(a) the highest amount applicable to him and one of his partners 
determined in accordance with paragraph 1(3) of Schedule 3 as if he 
and that partner were a couple; 

(b) an amount equal to the difference between the amounts specified in 
sub-paragraphs (3)(b) and (1)(b) of paragraph 1 of Schedule 3 in 
respect of each of his other partners; 

(c) an amount determined in accordance with paragraph 2 of Schedule 3 
(applicable amounts) in respect of any child or young person for 
whom he or a partner of his is responsible and who is a member of 
the same household; 

(d) if he or another partner of the polygamous marriage is responsible for 
a child or young person who is a member of the same household, the 
amount specified in Part 2 of Schedule 3 (family premium); 

(e) the amount of any premiums which may be applicable to him 
determined in accordance with Parts 3 and 4 of Schedule 3 
(premiums); 

(f) the amount of either the - 

(i) work-related activity component; or 

(ii) support component, 

which may be applicable to him in accordance with Part 5 of Schedule 3 
(the components). 

(g) the amount of any transitional addition which may be applicable 
to him in accordance with Parts 7 and 8 of Schedule 3 
(transitional addition). 

Schedule 3 

Applicable Amounts 

Part 5 The Components 

21 

Subject to paragraph 22, the claimant is entitled to one, but not both, of the 
components in paragraphs 23 or 24 if- 

(a) the claimant or the claimant's partner has made a claim for 
employment and support allowance; 

(b) the Secretary of State has decided that the claimant or the claimant's 
partner has, or is to be treated as having, limited capability for work or 
limited capability for work-related activity; and 



110 



(c) either - 

(i) the assessment phase as defined in section 24(2) of the Welfare 
Reform Act has ended; or 

(ii) regulation 7 of the Employment and Support Allowance 
Regulations (circumstances where the condition that the 
assessment phase has ended before entitlement to the support 
component or the work related activity component arises does 
not apply) applies. 

21 A. Subject to paragraph 22, the claimant is entitled to one, but not both, 
of the components in paragraphs 23 and 24 if the claimant or his partner 
has had an award of benefit converted to an employment and support 
allowance in accordance with regulation 5(2)(a) of the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) 
Regulations 2010 

22 

(1 ) The claimant has no entitlement under paragraph 23 or 24 if the 
claimant is entitled to the disability premium under paragraphs 12 and 13. 

(2) Where the claimant and the claimant's partner each satisfies paragraph 
23 or 24, the component to be included in the claimant's applicable amount is 
that which relates to the claimant. 

The work-related activity component 

23 

The claimant is entitled to the work-related activity component if the Secretary 
of State has decided that the claimant or the claimant's partner has, or is to 
be treated as having, limited capability for work. 

The support component 

24 

The claimant is entitled to the support component if the Secretary of State has 
decided that the claimant or the claimant's partner has, or is to be treated as 
having, limited capability for work-related activity. 

Part 6 Amount of Components 

25 

The amount of the work-related activity component is [£25.50]. 

26 

The amount of the support component is [£30.85]. 



111 



Part 7 
Transitional Addition 
27. 

(1) The claimant is entitled to the transitional addition calculated in 
accordance with paragraph 28 where the claimant or the claimant's 
partner - 

(a) has had an award of benefit converted to an employment and 
support allowance in accordance with regulation 5(2)(a) of the 
Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010; or 

(b) is treated as having limited capability for work by virtue of 
regulation 18A(2)( 23 ) of the Employment and Support Allowance 
Regulations, 

unless the employment and support allowance is income-related or 
the amount of the transitional addition calculated in accordance with 
paragraph 28 would be nil. 

(2) Subject to paragraphs (3) and (4), the claimant's entitlement to a 
transitional addition will end on whichever is the earlier of- 

(a) the reduction of the transitional addition to nil in accordance 
with paragraph 29; 

(b) the termination of the claimant's award of housing benefit; 

(c) the termination of the employment and support allowance 
referred to in sub-paragraph (1)(a); 

(d) 5th April 2020. 

(3) Paragraph (2)(b) does not apply where - 

(a) the claimant becomes entitled to housing benefit not more than 
12 weeks after the award was terminated and during that period 
the person to whom the award of the employment and support 
allowance referred to in sub-paragraph(1)(a)was - 

(i) entitled to an employment and support allowance; or 

(ii) treated as having limited capability for work in accordance 
with regulation 145(1) of the Employment and Support 
Allowance Regulations; or 



Regulation 18Awas inserted by S.I. 201 0/[]. 



112 



(b) the claimant becomes entitled to housing benefit not more than 
104 weeks after the award was terminated and during that period 
the person to whom the award of the employment and support 
allowance referred to in sub-paragraph (1)(a) was treated as 
having limited capability for work in accordance with regulation 
145(2) Employment and Support Allowance Regulations; 

(4) Where the employment and support allowance referred to in sub- 
paragraph (1)(a) is terminated and the person whose award was 
terminated - 

(a) becomes entitled to an employment and support allowance; and 

(b) is treated as having limited capability for work in accordance 
with regulation 145(1) or (2) of the Employment and Support 
Allowance Regulations for the period between the termination 
of the previous award and the new claim, 

from the date that the second award of employment and support 
allowance takes effect, the claimant will be entitled to the transitional 
addition that would have applied had the person been entitled to an 
employment and support allowance during that period. 

Part 8 

Amount of transitional addition 

28 

(1) Subject to paragraph 29, the amount of the transitional addition is 
the amount by which Amount A exceeds Amount B. 

(2) Amount A is the basic amount that would apply on the day the 
award of benefit is converted to an employment and support allowance, 
or entitlement to a provisional award begins, if that conversion did not 
occur or that entitlement did not begin. 

(3) Amount B is the basic amount that applies on the day the award of 
benefit is converted to an employment and support allowance, or 
entitlement to a provisional award begins, after that conversion has 
occurred or that entitlement has begun. 

29 

(1) Where there is a change of circumstances which leads to an 
increase in the claimant's basic amount, the transitional addition that 
applies immediately before the change of circumstances shall be 
reduced by the amount by which Amount C exceeds Amount D. 

(2) Amount C is the basic amount that applies on the day the change 
of circumstances takes effect. 



113 



(3) Amount D is the basic amount that applied immediately before the 
change of circumstances. 

(4) In this paragraph and paragraph 28, "basic amount" means the 
aggregate of such amounts as may apply in the claimant's case in 
accordance with regulation 22(a) to (e) or regulation 23(a) to (f). 

The Housing Benefit and Council Tax Benefit (Decisions and Appeals) 

Regulations 2001 (SI 2001/1002) 

7 Decisions superseding earlier decisions 

(1 ) Subject to the provisions in this regulation, the prescribed cases and 
circumstances in which a decision may be made under paragraph 4 of 
Schedule 7 to the Act (decisions superseding earlier decisions) are as set 
out in paragraph (2). 

(2) The appropriate relevant authority may make a decision under 
paragraph 4 of Schedule 7 to the Act upon its own initiative or on an application 
made for the purpose on the basis that the decision to be superseded is a 
decision - 

(i) except where sub-paragraph (o) (p) or (q) applies, where - 

(i) the claimant has been awarded entitlement to housing benefit or 
council tax benefit; and 

(ii) subsequent to the first day of the period to which that entitlement 
relates, the claimant or a member of his family becomes entitled 
to an award of a relevant benefit within the meaning of section 
8(3) of the 1998 Act or an increase in the rate of that relevant 
benefit; 

(o) where - 

(i) the claimant has been awarded entitlement to housing benefit or 
council tax benefit; 

(ii) the claimant or the claimant's partner has made a claim for 
employment and support allowance; 

(iii) subsequent to the first day of the period to which entitlement to 
housing benefit or council tax benefit relates, the Secretary of 
State has decided that the claimant or the claimant's partner has, 
or is to be treated as having, limited capability for work within the 
meaning of section 1 (4) of the Welfare Reform Act or limited 
capability for work-related activity within the meaning of section 
2(5) of that Act; and 



114 



(iv) either - 

(aa) the assessment phase as defined in section 24(2) of the 
Welfare Reform Act has ended; or 

(bb) regulation 7 of the Employment and Support Allowance 
Regulations 2008 (circumstances where the condition that 
the assessment phase has ended before entitlement to the 
support component or the work related activity component 
arises does not apply) applies. 

(p) where - 

(i) the claimant has been awarded entitlement to housing 
benefit or council tax benefit; 

(ii) the claimant or the claimant's partner has had an award of 
benefit converted to an employment and support allowance 
in accordance with regulation 5(2)(a) of the Employment and 
Support Allowance (Transitional Provisions) (Existing 
Awards) Regulations 2010; and 

(Hi) subsequent to the first day of the period to which that 

entitlement to housing benefit or council tax benefit relates, 
the Secretary of State makes a decision to supersede the 
award of employment and support allowance to award a 
different component; 

(q) where the claimant has been awarded entitlement to housing 
benefit or council tax benefit and subsequent to the first day of 
the period to which that entitlement relates - 

(i) a conversion decision within the meaning of regulation 5(2) 
(a) of the Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010 takes effect 
in respect of the claimant or the claimant's partner; or 

(ii) the claimant is treated as having limited capability for work 
by virtue of regulation 18A(2) of the Employment and 
Support Allowance Regulations. 

8 Date from which a decision superseding an earlier decision takes effect 

(14D) Where the decision is superseded in accordance with regulation 7(2) 
(o) or (p), the decision shall take effect from - 

(a) the first day of entitlement to an amount in consequence of the decision 
of the Secretary of State referred to in regulation 7(2)(o)(iii); or 



115 



(b) the first day that there would have been such entitlement had the 

claimant or the claimant's partner been entitled to an employment and 
support allowance by virtue of section 1 of the Welfare Reform Act, 

if that day is the first day of the benefit week but, if it is not, from the next 
following such day. 

(14E) Where a decision is superseded in accordance with regulation 7(2)(q) 
the decision shaii take effect - 

(a) where the decision made in accordance with the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) 
Regulations 2010 takes effect on or after 1st April in any year but 
before 15th April of that year - 

(i) from 1st April for a council tax benefit award; 

(ii) from 1st April for a housing benefit award in which the 
claimant's weekly amount of eligible rent falls to be 
calculated in accordance with regulation 80(2)(b) or (c) of 
the Housing Benefit Regulations or, as the case may be, 
regulation 61(2)(b) or (c) of the Housing Benefit (State 
Pension Credit) Regulations; 

(Hi) from the first Monday in April for a housing benefit award to 
which paragraph (a)(1) does not apply; 

(b) in any other case from the day decision made in accordance with 
the Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010 takes effect. 



116 



APPENDIX 2 

THE EMPLOYMENT AND SUPPORT ALLOWANCE (TRANSITIONAL 
PROVISIONS) (EXISTING AWARDS) REGULATIONS 2010 



STATUTORY INSTRUMENTS 

2010 No. 

SOCIAL SECURITY 

The Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010 

Made - *** 

Laid before Parliament *** 

Coming into force in accordance with regulation 1(2) and (3) 

CONTENTS 

PARTI 

GENERAL 

1. Citation and commencement 

2. Interpretation 

3. Persons to whom these Regulations apply 

PART 2 
CONVERSION DECISIONS 

4. The notice commencing the conversion phase 

5. Deciding whether an existing award qualifies for conversion 

6. Application of certain enactments for purpose of making conversion decisions 

7. Qualifying for conversion 

8. Amount of an employment and support allowance on conversion 

9. Determining entitlement to a transitional addition 

10. Transitional addition: incapacity benefit or severe disablement allowance only 

11. Transitional addition: income support 

12. Regulations 10 and 11: supplementary 

13. Circumstances in which no transitional addition is payable 

14. The effective date of a conversion decision 

15. Conversion decision that existing award qualifies for conversion 

16. Conversion decision that existing award does not qualify for conversion 



117 



PART 3 
AFTER THE CONVERSION PHASE 

17. Application of other enactments applying to employment and support allowances 

18. Review of transitional addition in certain cases where income-related allowance 
terminates 

19. Reducing the transitional addition: general rule 

20. Reducing the transitional addition: increases for dependent children 

21. Reducing the transitional addition: increases for adult dependants 

22. Termination of transitional addition 

PART 4 
MISCELLANEOUS 

23. Disapplication of certain enactments following conversion decision 

24. Revocation of saving for certain linked claims 

25. Amendment of the Employment and Support Allowance Regulations 2008 

26. Consequential amendments 



SCHEDULES 

SCHEDULE 1 — Modification of enactments: making conversion decisions 

SCHEDULE 2 — Modification of enactments: after the conversion phase 

SCHEDULE 3 — List of regulations that apply after the conversion phase 

SCHEDULE 4 — Consequential amendments 

The Secretary of State for Work and Pensions makes the following Regulations in exercise of the 
powers conferred by section 25(2), (3) and (5), 28(2) and 29 of, and paragraph 2 of Schedule 2 and 
paragraphs 1(1), 3(b), 7(l)(a) and (b), (2) and (3) and 8(l)(a) to (e) of Schedule 4 to, the Welfare 
Reform Act 2007(a). 

In accordance with section 172(1) of the Social Security Administration Act 1992(b), the 
Secretary of State has referred these Regulations to the Social Security Advisory Committee. 

[In accordance with section 176(1) of the Social Security Administration Act 1992, the Secretary 
of State has consulted with organisations appearing to him to be representative of the authorities 
concerned.] 



PARTI 
GENERAL 

Citation and commencement 

1. — (1) These Regulations may be cited as the Employment and Support (Transitional 
Provisions) (Existing Awards) Regulations 2010. 



(a) 2007 c.5. 

(b) 1992 c.5. 



118 



(2) Subject to paragraph (3), these Regulations come into force on 1st October 2010. 

(3) Regulations 24 and 25 and paragraph 2 of Schedule 4 come into force on 31st January 2011. 

Interpretation 

2. — In these Regulations — 

"the 2007 Act" means the Welfare Reform Act 2007; 

"the 2008 Regulations" means the Employment and Support Allowance Regulations 2008(a); 

"benefit week" has the same meaning as in the 2008 Regulations; 

"contributory allowance" means an employment and support allowance to which a person is 
entitled by virtue of these Regulations which was based on an award of incapacity benefit or 
severe disablement allowance to which the person was entitled(b); 

"conversion decision", in relation to a notified person, has the meaning given in regulation 

5(2); 

"effective date", in relation to a conversion decision, is to be construed in accordance with 
regulation 14; 

"enactment" includes an enactment contained in subordinate legislation (within the meaning 
of the Interpretation Act 1978(c)); 

"income-related allowance" means an employment and support allowance to which a person is 
entitled by virtue of these Regulations which was based on an award of income support to 
which the person was entitled(d); 

"notified person" has the meaning given in regulation 4(2); 

"pensionable age" has the meaning given by the rules in paragraph 1 of Schedule 4 to the 
Pensions Act 1995(e); 

"relevant deduction", in relation to a person, includes such of the following deductions as fall 
to be made in relation to the person — 

(a) any deduction made under any of the following provisions of the Social Security (Claims 
and Payments) Regulations 1987(f) — 

(i) regulation 34A (deductions of mortgage interest which shall be made from benefit 
and paid to qualified lenders); 

(ii) regulation 34B (deductions of mortgage interest which may be made from benefits 
and paid to qualified lenders in other cases); or 

(iii) regulation 35 (deductions which may be made from benefit and paid to third 
parties); 

(b) any deduction made under the Community Charges (Deductions from Income Support) 
(No. 2) Regulations 1990(g) (deductions which may be made from benefit for meeting 
sums due in respect of community charges); 

(c) any deduction made under the Fines (Deductions from Income Support) Regulations 
1992(h) (deductions which may be made from an offender's benefit); 



(a) S.I. 2008/794. 

(b) "Incapacity benefit" and "severe disablement allowance" are defined in paragraph 11 of Schedule 4 to the Welfare Reform 
Act 2007. 

(c) 1978 c.30. 

(d) Awards of income support which are "existing awards" (being awards made to persons who are incapable of work or 
disabled) are specified in paragraph (c) of the definition of "existing award" in paragraph 1 1 of Schedule 4 to the Welfare 
Reform Act 2007. 

(e) 1995 c.26. Paragraph 1 of Schedule 4 was amended by paragraph 39 of Schedule 2 to the State Pension Credit Act 2002 
(c.16), paragraph 13 of Schedule 3 to the Welfare Reform Act 2007 (c.5) and paragraph 4(2) to (6) of Schedule 3 to the 
Pensions Act 2007 (c.22). 

(t) S.I.1987/1968. Relevant amending instruments are S.I. 1988/522, 1992/1026, 2001/18, 2002/2441, 2002/3019 and 

2002/3197. 
(g) S.I. 1990/545. These regulations lapsed on the repeal of the enabling authority, as from 1st April 1993, except in relation to 

any community charge in respect of a day falling before that date or in relation to any financial year beginning before that 

date. 
(h) S.I. 1992/2182. 



119 



(d) any deduction made under the Council Tax (Deductions from Income Support) 
Regulations 1993(a) (deductions which may be made from benefit for meeting sums due 
in respect of council tax); 

(e) any deduction in respect of overpayment recovery or recovery of social fund loans made 
under any of the following provisions of the Administration Act(b) — 

(i) section 71 (overpayments-general); 

(ii) section 74 (income support and other payments); or 

(hi) section 78 (recovery of social fund awards). 

(2) A requirement under these Regulations to give a notice (or to notify) is a requirement to 
give notice in writing; and for that purpose — 

(a) a message sent by electronic communication shall be treated as a notice given in writing; 
and 

(b) electronic communication has the meaning given in section 15(1) of the Electronic 
Communications Act 2000(c). 

(3) For the purposes of these Regulations, the conversion phase, in relation to any person 
entitled to an existing award or awards, is the period which — 

(a) begins in accordance with regulation 4(4); and 

(b) ends in accordance with regulation 5(6). 

(4) Any reference in these Regulations to carrying out Steps 1 to 3 in relation to any person is to 
be construed in accordance with regulation 8. 

Persons to whom these Regulations apply 

3. These Regulations apply to any person who, on or after the date on which these Regulations 
come into force, is entitled to an existing award(d). 



PART 2 
CONVERSION DECISIONS 

The notice commencing the conversion phase 

4. — (1) Subject to paragraph (5), the Secretary of State may at any time issue a notice to any 
person who is entitled to an existing award. 

(2) Any person to whom such a notice is issued is referred to in these Regulations as a notified 
person. 

(3) The notice must inform the notified person — 

(a) that an existing award is to be converted into an award of an employment and support 
allowance if certain conditions are satisfied; 

(b) that, if those conditions are not satisfied, the existing award will not be converted and 
will terminate by virtue of these Regulations; 

(c) of the requirements that must be met in order to satisfy those conditions; and 

(d) of such other matters as the Secretary of State considers appropriate. 

(4) The issue of the notice to a notified person begins the conversion phase in relation to that 
person, with effect from the date of issue. 



(a) S.I. 1993/494. 

(b) The "Administration Act" is defined in section 65 of the Welfare Reform Act 2007. 

(c) 2000 c.7. The definition of "electronic communication" in section 15(1) was amended by paragraph 158 of Schedule 17 to 
the Communications Act 2003 (c. 21). 

(d) "Existing award" is defined in paragraph 1 1 of Schedule 4 to the Welfare Reform Act 2007. 



120 



(5) No notice may be issued to any person — 

(a) who reaches pensionable age at any time before 6th April 2014; or 

(b) at any time when payment of the existing award to the person is subject to adjustment 
under regulation 4 of the Social Security (Transitional Payments) Regulations 2009(a) 
(adjustment of subsequent payments following an adjusting payment of benefit). 

(6) Where a person is entitled to — 

(a) an existing award of incapacity benefit or severe disablement allowance; and 

(b) an existing award of income support, 

the notice issued to the person under this regulation shall have effect in relation to both such 
awards. 

Deciding whether an existing award qualifies for conversion 

5. — (1) In relation to the existing award or awards to which a notified person ("P") is entitled, 
the Secretary of State must make a conversion decision in accordance with these Regulations. 

(2) A conversion decision is — 

(a) a decision that P's existing award or awards qualify for conversion into an employment 
and support allowance in accordance with regulation 7; or 

(b) a decision that P's existing award or awards do not qualify for conversion into an 
employment and support allowance. 

(3) A notice under paragraph (2)(a) must specify the amount of an employment and support 
allowance to which P is entitled on and after the effective date (subject to any relevant 
deductions). 

(4) The amount referred to in paragraph (3) is to be determined in accordance with regulation 8. 

(5) The Secretary of State must notify P of the Secretary of State's conversion decision, except 
where paragraph (8)(a) applies. 

(6) The conversion phase ends in relation to P — 

(a) immediately before the effective date of the conversion decision notified to P; or 

(b) if earlier, when P's entitlement to the award or awards to which the notice under 
regulation 4 relates otherwise ceases to be subject to conversion (because entitlement to 
the award has terminated or for some other reason). 

(7) The effective date of any conversion decision is to be determined in accordance with 
regulation 14. 

(8) In the event that P's entitlement to an existing award ceases to be subject to conversion 
(for example, because P's entitlement to an award of income support has ceased to fall within 
paragraph (c) of the definition of "existing award" in Schedule 4 to the 2007 Act) — 

(a) before a conversion decision is made, the Secretary of State must notify P that the 
conversion phase has ended without a conversion decision being made; or 

(b) after the making of a conversion decision but before its effective date, the Secretary of 
State must notify P that the conversion decision shall not come into effect and it shall 
lapse with immediate effect. 

Application of certain enactments for purpose of making conversion decisions 

6. — (1) The enactments listed in paragraph (2) apply with the modifications specified in 
Schedule 1 for the purposes of — 

(a) enabling the Secretary of State to make in relation to any person a conversion decision 
under this Part; and 



(a) S.I. 2009/609. 



121 



(b) providing for the revision of such decisions at any time before the effective date. 

(2) The listed enactments are — 

(a) Part 1 of the 2007 Act; 

(b) the 2008 Regulations; 

(c) regulation 32(1) and (1A) of the Social Security (Claims and Payments) Regulations 
1987(a) (information to be given); 

(d) Chapter 2 of Part 1 of the Social Security Act 1998(b) (social security decisions and 
appeals); and 

(e) the Social Security and Child Support (Decisions and Appeals) Regulations 1999(c). 

(3) In the application of the enactments listed in paragraph (2)(d) and (e), the conversion 
decision is to be treated as if it were a decision as to a person's entitlement to an employment and 
support allowance which had been made on a claim. 

Qualifying for conversion 

7. For the purposes of regulation 5(2)(a), an existing award or awards to which a notified person 
is entitled qualify for conversion into an award of an employment and support allowance only if 
the person satisfies the basic conditions set out in section l(3)(a) to (d) and (f) of the 2007 Act. 

Amount of an employment and support allowance on conversion 

8. For the purposes of regulation 5(3), the amount of an employment and support allowance to 
which a notified person is entitled shall be determined as follows. 

Step 1 

Determine in accordance with Part 1 of the 2007 Act and the 2008 Regulations the amount (if 
any) of an employment and support allowance to which the notified person would be entitled 
if, on a claim made by that person — 

(a) it had been determined that the person was entitled to an award of an employment and 
support allowance; and 

(b) the assessment phase had ended. 

Step 2 
Determine in accordance with regulations 9 to 13 — 

(a) whether the notified person is entitled to a transitional addition; and 

(b) if so, the amount of the transitional addition. 

Step 3 
Aggregate the amounts (if any) which result from Steps 1 and 2. 

Determining entitlement to a transitional addition 

9. — (1) In relation to any notified person whose existing award or awards qualify for 
conversion into an employment and support allowance — 

(a) the person's entitlement (if any) to a transitional addition; and 

(b) the amount of any such transitional addition, 

are to be determined in accordance with regulation 10(2) or 11(2). 
(2) Paragraph (1) is subject to regulations 13 and 18. 



(a) S.I. 1987/1968. Regulation 32(1) and (1A) were substituted by S.I. 2003/1050. 

(b) 1998 c.14. 

(c) S.I. 1999/991. 



122 



(3) The amount of transitional addition to which a notified person is entitled is subject to 
reduction in accordance with regulations 1 9 to 2 1 . 

(4) The entitlement of a notified person to any transitional addition terminates in accordance 
with regulation 22. 

Transitional addition: incapacity benefit or severe disablement allowance only 

10. — (1) This regulation applies to any notified person who — 

(a) is entitled to an existing award of incapacity benefit or severe disablement allowance; 
and 

(b) is not also entitled to any existing award of income support. 

(2) In any case falling within paragraph (1) — 

(a) the notified person shall be entitled to a transitional addition if Amount A exceeds 
Amount B; and 

(b) the amount of transitional addition payable under this paragraph shall be equal to the 
amount of any such excess. 

(3) Amount A is the amount of the weekly rate of the existing award applicable to the notified 
person. 

(4) To calculate Amount B — 

(a) take the amount prescribed under paragraph (2) of regulation 67 of the 2008 Regulations 
(prescribed amounts for purpose of calculating a contributory allowance) which is 
applicable to the notified person; and 

(b) add the amount of the applicable component determined in accordance with regulation 
12(5). 

(5) In paragraph (3), the reference to the weekly rate of an existing award applicable to the 
notified person is to — 

(a) in the case of incapacity benefit, the weekly rate payable — 

(i) under section 30B(2), (6) or (7) of the Contributions and Benefits Act(a) (incapacity 
benefit: rate); 

(ii) under section 40(5) or 41(4) of the Contributions and Benefits Ac(b) (long term 
incapacity benefit for widows and for widowers); 

(iii)by virtue of regulation 11(4) of the Social Security (Incapacity Benefit) 
(Transitional) Regulations 1995(c) (former sickness benefit); or 

(iv) by virtue of regulation 17(1) of those Regulations (former invalidity benefit); 

(b) in the case of severe disablement allowance, the weekly rate payable under sections 
68(7) and 69(1) of the Contributions and Benefits Act (as they have effect by virtue of 
article 4 of the Welfare Reform and Pensions Act 1999 (Commencement No. 9 and 
Transitional and Savings Provisions) Order 2000(d)). 

Transitional addition: income support 

11. — (1) This regulation applies to any notified person who is entitled to an existing award of 
income support (and for these purposes it is irrelevant whether the person is also entitled to any 
existing award of incapacity benefit or severe disablement allowance). 



(a) 1992 c.4. "Contributions and Benefits Act" is defined in section 65 of the Welfare Reform Act 2007. Section 30B was 
inserted by section 2( 1 ) of the Social Security (Incapacity for Work) Act 1 994 (c. 1 8) and is to be repealed by paragraph 9(5) 
of Schedule 3 to the Welfare Reform Act 2007. 

(b) Sections 40 and 4 1 were substituted by paragraphs 8 and 9 of Schedule 1 to the Social Security (Incapacity for Work) Act 
1994. They are to be repealed by Schedule 8 to the Welfare Reform Act 2007. 

(c) S.I. 1995/310. 

(d) S.I. 2000/2958 (C.89). 



123 



(2) In any case falling within paragraph (1) — 

(a) the notified person shall be entitled to a transitional addition if Amount C exceeds Amount 
D; and 

(b) the amount of transitional addition payable under this paragraph shall be equal to the 
amount of any such excess. 

(3) To calculate Amount C — 

(a) take the notified person's weekly applicable amount under regulation 17 or 18 of, and 
Schedule 2 to, the Income Support (General) Regulations 1987(a) (applicable amounts); 

(b) disregard any amount determined in accordance with regulation 17(l)(e) or 18(l)(f) of, 
and Schedule 3 to, those Regulations (housing costs) (as the case may be); and 

(c) disregard any amount included in the person's applicable amount — 

(i) under regulation 17(l)(b), (c) or (d) of those Regulations(b) in respect of a child or 
young person who is a member of the notified person's family; or 

(ii) under regulation 18(l)(b), (c), (d) or (e) of those Regulations in respect of a child 
or young person who is a member of the same household as the notified person, 

as those provisions have effect by virtue of regulations 1 and 7 of the Social Security 
(Working Tax Credit and Child Tax Credit) (Consequential Amendment) Regulations 
2003(c). 

(4) To calculate Amount D — 

(a) take the amount prescribed under regulation 67(1) or 68(1) of the 2008 Regulations 
(prescribed amounts for purpose of calculating an income-related allowance) which is 
applicable to the notified person; 

(b) disregard any amount determined in accordance with regulation 67(l)(c) or 68(l)(d) 
(housing costs) (as the case may be); and 

(c) add the amount of the applicable component determined in accordance with regulation 
12(5). 

Regulations 10 and 11: supplementary 

12. — (1) This regulation has effect for the purposes of applying regulations 10 and 11 in 
relation to any notified person. 

(2) Subject to paragraphs (3) and (4) — 

(a) Amounts A and C are to be calculated in respect of the benefit week which ends 
immediately before the effective date of the notified person's conversion decision; and 

(b) Amounts B and D are to be calculated in respect of the benefit week the first day of 
which is the effective date of the notified person's conversion decision. 

(3) Where— 

(a) by virtue of an order made under section 1 5 of the Administration Act (annual up-rating 
of benefits), there is an increase in — 

(i) the weekly rate which, in accordance with regulation 1 0(3), is to be used to calculate 
Amount A; or 



(a) S.I. 1987/1967. Regulation 17 was amended by S.I. 1988/910 and 1445, 1989/1678, 1991/387, 1992/3147, 1996/206, 
2003/455 and 1121, 2005/2687 and 2006/588. Regulation 18 was amended by S.I. 1988/1228 and 1445, 1989/1034, 
1992/3147, 1996/206, 2001/3767, 2003/455 and 1121 and 2006/588. 

(b) Regulations 17(l)(b) and (c) and 18(l)(c) and (d) of, and paragraphs 2, 3 and 6(l)(c) of Schedule 2 to, the Income Support 
(General) Regulations 1987 ("the 1987 Regulations") (amounts for child or young person, family premium and disabled 
child premium) were revoked by S.I. 2003/455. Paragraph 13A(b) and (2)(a) of the 1987 Regulations (which provide for 
enhanced disability premium) were also amended by S.I. 2003/455 so as to exclude children or young persons from the list 
of persons to whom such premiums may relate. The revocations and amendments are subject to savings in accordance with 
regulations 1 and 7 of S.I. 2003/455, as amended by regulation 2(2) of S.I. 2005/2294. 

(c) S.I. 2003/455. 



124 



(ii) the applicable amount which, in accordance with regulation 11(3), is to be used to 
calculate Amount C; and 

(b) that increase takes effect from any day in the benefit week referred to in paragraph 

(2)(b), 

the calculation of Amount A or C is to be made using the increased weekly rate or applicable 
amount (as the case may be). 

(4) Where— 

(a) there is a change of circumstances in relation to a notified person which, but for sub- 
paragraph (b), would have resulted in an increase or decrease of the weekly rate or 
applicable amount referred to in paragraph (3)(a)(i) or (ii); and 

(b) that increase or decrease would have taken effect from any day in the benefit week 
referred to in paragraph (2)(b), 

the calculation of Amount A or C is to be made using the weekly rate or applicable amount (as the 
case may be) which would have been payable in respect of the existing award if it had not been 
subject to conversion under these Regulations. 

(4) The "applicable component", in relation to the notified person, means — 

(a) the work-related activity component, if it has been determined in accordance with the 
enactments applied by regulation 6 that the notified person does not have and is not to be 
treated as having limited capability for work-related activity; 

(b) the support component, if it has been determined in accordance with those enactments 
that the notified person has or is to be treated as having limited capability for work- 
related activity. 

Circumstances in which no transitional addition is payable 

13. A notified person is not entitled to any transitional addition if, in relation to that person, 
the amount which results from carrying out Step 1 is nil and the amount of transitional addition 
which results from Step 2 is less than 10 pence. 

The effective date of a conversion decision 

14. — (1) For the purposes of determining the date on which a conversion decision takes effect 
in relation to any notified person — 

(a) take the date on which the person is notified of the conversion decision; and 

(b) unless paragraph (2) applies, determine the first complete fortnightly period in respect of 
which the person's existing benefit is payable after that date; 

and the effective date of the person's conversion decision is the first day of the benefit week 
immediately following the end of the fortnightly period referred to in sub-paragraph (b). 

(2) Where existing benefit is payable to the notified person in respect of a period other than a 
fortnight — 

(a) determine the second complete benefit week in respect of which the person's existing 
benefit is payable after the date on which the person is notified of the conversion 
decision; and 

(b) the effective date of the person's conversion decision is the first day of the benefit week 
immediately following the end of that second complete benefit week. 

(3) "Existing benefit", in relation to a notified person, means the benefit in respect of the 
person's existing award or awards. 



125 



Conversion decision that existing award qualifies for conversion 

15. — (1) Paragraphs (2) and (3) apply in any case where the conversion decision is a decision 
that a notified person's ("P") existing award or awards qualify for conversion into an employment 
and support allowance. 

(2) On the effective date of the conversion decision — 

(a) P's existing award; or 

(b) both of P's existing awards (as the case may be), 

are by virtue of this paragraph converted into, and shall have effect on and after that date as, a 
single award of an employment and support allowance of such amount as is specified in the 
conversion decision. 

(3) Where, before conversion, any relevant deduction was made from the existing award or 
awards, an equivalent deduction shall be made from the employment and support allowance to 
which P is entitled by virtue of these Regulations. 

(4) Paragraphs (2) and (3) are subject to regulation 17(4). 

Conversion decision that existing award does not qualify for conversion 

16. — (1) Paragraphs (2) and (3) apply in any case where the conversion decision is a decision 
that a notified person's ("P") existing award or awards do not qualify for conversion into an 
employment and support allowance. 

(2) P's entitlement to one or both of — 

(a) an existing award of incapacity benefit or severe disablement allowance; or 

(b) an existing award of income support (being an award made to a person incapable of work 
or disabled), 

shall terminate by virtue of this paragraph immediately before the effective date of P's conversion 
decision. 

(3) Where, immediately before that date, P is entitled to be credited with any earnings under 
regulation 8B(2)(a) of the Social Security (Credits) Regulations 1975(a) (credits for incapacity for 
work), P shall not be entitled to be so credited under that regulation on or after that date. 

(4) Paragraphs (2) and (3) are subject to regulation 17(4). 



PART 3 

AFTER THE CONVERSION PHASE 

Application of other enactments applying to employment and support allowances 

17. — (1) The enactments listed in paragraph (2) apply with the modifications specified in 
Schedule 2 for the purposes of — 

(a) providing for the revision or supersession of any person's conversion decision at any 
time on or after that decision's effective date; and 

(b) enabling any other matter to be determined in connection with any person's entitlement 
or continuing entitlement to an award of an employment and support allowance by virtue 
of these Regulations. 

(2) The listed enactments are — 

(a) Part 1 of the 2007 Act; 



(a) S.I. 1975/556. Regulation 8B was inserted by SI 1996/2367 and amended by S.I. 2008/1554. 



126 



(b) Chapter 2 of Part 1 of the Social Security Act 1998(a) (social security decisions and 
appeals); 

(c) any other Act which is amended by Schedule 3 to the 2007 Act; 

(d) the Social Security (Recovery of Benefits) Act 1997(b); and 

(e) the following regulations — 

(i) this Part of these Regulations; 

(ii) the 2008 Regulations; and 

(iii) the Regulations listed in Schedule 3 to these Regulations (being regulations 
consequentially amended by regulations made under Part 1 of the 2007 Act). 

(3) In the application of those enactments, the conversion decision is to be treated as if it were a 
decision as to a person's entitlement to an employment and support allowance which had been 
made on a claim. 

(4) Where, on or after the effective date of any person's conversion decision, the Secretary of 
State is notified of any change of circumstances or other relevant event which occurred before 
that date, the Secretary of State — 

(a) must treat any award converted by virtue of regulation 15(2) or terminated by virtue of 
regulation 16(2) as if it had not been converted or terminated; 

(b) must take account of the change of circumstances or other relevant event for the 
purposes of determining whether to revise or supersede a decision ("the earlier 
decision") relating to the award or awards in respect of which the conversion decision 
was made; 

(c) in an appropriate case, must make a revision or supersession of the earlier decision; 

(d) if any such revision or supersession is made, must determine whether to revise the 
conversion decision made in relation to P; and 

(e) in an appropriate case, must make a revision of that conversion decision. 

Review of transitional addition in certain cases where income-related allowance terminates 

18. — (1) This regulation applies to any person ("T") who — 

(a) was entitled immediately before the effective date of T's conversion decision to both — 

(i) an existing award of incapacity benefit or severe disablement allowance; and 
(ii) an existing award of income support; 

(b) was entitled on and after that date to an amount of transitional addition under regulation 
1 1 ; and 

(c) was entitled on and after that date to an income-related allowance which has since ceased 
to be payable. 

(2) The Secretary of State must determine whether T would have been entitled to a transitional 
addition in accordance with regulation 10 if that person had not been entitled to an existing award 
of income support immediately before the effective date of T's conversion decision. 

(3) For the purposes of paragraph (2) — 

(a) T's entitlement to, and amount of, a transitional addition (if any) is to be determined 
by reference to what would have been payable on the effective date, subject to any 
subsequent adjustment of that amount that would have been made under this Part; and 

(b) any amount of transitional addition which is payable as a result of that determination is 
in addition to any amount falling within paragraph (l)(b) to which T continues to be 
entitled. 



(a) 1998 c.14. 

(b) 1997 c.27. 



127 



(4) Regulation 12 has effect for the purposes of making the determination under paragraph (2). 

Reducing the transitional addition: general rule 

19. — (1) The amount of any transitional addition to which a person is entitled by virtue of these 
Regulations shall be reduced (but not below nil) by a sum equal to the aggregate amount of all 
relevant increases which occur on or after the effective date in the amount payable to the person 
by way of an employment and support allowance. 

(2) For the purposes of paragraph (1), a relevant increase is — 

(a) in relation to a person entitled to a contributory allowance, an increase in any amount 
applicable to the person under regulation 67(2)(a) or (3) of the 2008 Regulations(a); and 

(b) in relation to a person entitled to an income-related allowance, an increase in any amount 
applicable to the person under regulation 67(l)(a) or (b) or (3) or 68(l)(a), (b) or (c) of 
the 2008 Regulations, 

which is not excluded by paragraph (3). 

(3) In relation to any person, the excluded increases are — 

(a) any increase applicable to the benefit week the first day of which is the effective date of 
the person's conversion decision; and 

(b) any increase resulting from the reversal (on appeal or otherwise) of any decision made 
by the Secretary of State that a person who was previously entitled to the support 
component has become entitled to the work-related activity component. 

(4) No amount shall be payable by way of a transitional addition at any time when — 

(a) a person's entitlement to a transitional addition is less than 10 pence; and 

(b) the amount of an employment and support allowance that is otherwise payable to the 
person is nil. 

Reducing the transitional addition: increases for dependent children 

20. — (1) Paragraphs (2) and (3) apply to any person ("T") who — 

(a) on the day before the effective date of T's conversion decision, was entitled in 
connection with an existing award of incapacity benefit or severe disablement allowance 
to an increase under section 80 of the Contributions and Benefits Act (beneficiary's 
dependent children), as that section has effect by virtue of article 3 of the Tax Credits 
(Commencement No. 3 and Transitional Provisions and Savings) Order 2003(b); and 

(b) on and after the effective date, is entitled by virtue of these Regulations to an 
employment and support allowance which includes an amount by way of a transitional 
addition. 

(2) The amount of the transitional addition shall be reduced in accordance with paragraph (3) 
on the termination, on or after the effective date, of T's entitlement to child benefit in respect of 
the child or qualifying young person — 

(a) for whom; or 

(b) for whose care by an adult dependant, 

T was entitled to the increase referred to in paragraph (l)(a). 

(3) The amount of the transitional addition shall be reduced (but not below nil) by a sum equal 
to the amount which, on the day before the effective date, was the amount of the increase referred 
to in paragraph (l)(a) to which T was entitled. 



(a) The reference to regulation 67(2)(a) of the 2008 Regulations is to that regulation as modified by paragraph 14(b) of 
Schedule 2 these Regulations. 

(b) S.I. 2003/938. 



128 



Reducing the transitional addition: increases for adult dependants 

21. — (1) Paragraphs (2) and (3) apply to any person ("T") who — 

(a) on the day before the effective date of T's conversion decision, was entitled in 
connection with an existing award of incapacity benefit or severe disablement allowance 
to an increase under — 

(i) section 86Aofthe Contributions andBenefitsAct(a) (incapacity benefit -increases 
for adult dependants); or 

(ii) section 90 of the Contributions and Benefits Act (adult dependants of beneficiaries 
in receipt of severe disablement allowance); and 

(b) on and after the effective date, is entitled by virtue of these Regulations to an 
employment and support allowance which includes an amount by way of a transitional 
addition. 

(2) The amount of the transitional addition shall be reduced in accordance with paragraph (3) 
on the occurrence, on or after the effective date, of any of the following events — 

(a) the death of the adult dependant in respect of whom T was entitled to the increase 
referred to in paragraph (l)(a); 

(b) the separation of T and that adult dependant; 

(c) the award to that adult dependant of a personal benefit (within the meaning of the Social 
Security (Overlapping Benefits) Regulations 1979(b)) which is equal to or more than the 
amount which, on the day before the effective date, was the amount of the increase 
referred to in paragraph (l)(a) to which T was entitled. 

(3) The amount of the transitional addition shall be reduced (but not below nil) by a sum equal 
to the amount which, on the day before the effective date, was the amount of the increase referred 
to in paragraph (l)(a) to which T was entitled. 

Termination of transitional addition 

22. — (1) Any entitlement to a transitional addition which a person ("T") may have by virtue of 
these Regulations terminates on whichever is the earlier of — 

(a) the reduction in accordance with regulations 19 to 21 of the amount of the transitional 
addition to nil; 

(b) subject to paragraphs (2) and (3), the termination in accordance with the enactments 
applied by regulation 17 of T's entitlement to an employment and support allowance; 
and 

(c) 5th April 2020. 

(2) Nothing in paragraph (l)(b) prevents reinstatement of a person's entitlement to a transitional 
addition following the reversal on appeal of any determination which results in the termination of 
the person's entitlement to an employment and support allowance. 

(3) Any termination of T's entitlement to a transitional addition by virtue of paragraph (l)(b) 
shall instead have effect as a suspension of that entitlement in Case 1 or Case 2. 

(4) Case 1 is where — 

(a) on a subsequent claim made by T for an employment and support allowance, a period 
of limited capability for work is treated under regulation 145(1) or (2) of the 2008 
Regulations (linking rules) as a continuation of an earlier period of limited capability for 
work; and 

(b) T's entitlement to an employment and support allowance which is referred to in 
paragraph (l)(b) ("T's old entitlement") was in respect of that earlier period. 



(a) Section 86Awas inserted by section 2(5) of the Social Security (Incapacity for Work) Act 1994 (c.li 

(b) S.I. 1979/597. 



129 



(5) Case 2 is where — 

(a) T's old entitlement was to an income-related allowance; 

(b) the reason for terminating that entitlement was that the condition set out in paragraph 
6(l)(f) of Schedule 1 to the 2007 Act had ceased to be satisfied in T's case (no 
entitlement to income-related allowance where other member of a couple engages in 
remunerative work); and 

(c) on a subsequent claim for an income-related allowance, T's entitlement to such an 
allowance commences before the end of the 12 week period which begins with the date 
of termination of T's old entitlement. 

(6) In Cases 1 and 2, the amount of the transitional addition which becomes payable on 
commencement of T's entitlement to an employment and support allowance is to be determined 
by reference to the amount of the transitional addition that was payable on the termination of T's 
old entitlement, subject to any subsequent adjustment of that amount that would have been made 
under this Part. 



PART 4 

MISCELLANEOUS 

Disapplication of certain enactments following conversion decision 

23. Where a conversion decision has been made in relation to any person, the following 
enactments shall not apply to that person with effect from the conversion decision's effective 
date — 

(a) sections 30A, 40 or 41 of the Contributions and Benefits Act(a) (incapacity benefit); 

(b) section 68 of the Contributions and Benefits Act (as it has effect by virtue of article 4 of 
the Welfare Reform and Pensions Act 1999 (Commencement No. 9, and Transitional and 
Savings Provisions) Order 2000(b)); 

(c) regulation 13(2)(b) or (bb) of, or paragraph 7(a) or (b), 10, 12 or 13 of Schedule IB to, 
the Income Support (General) Regulations 1987(c) (prescribed category of persons for 
the purposes of entitlement on grounds of incapacity or disability); 

(d) the Income Support Transitional Regulations 1987(d); 

(e) the Incapacity Benefit Transitional Regulations 1995(e). 

Revocation of saving for certain linked claims 

24. In regulation 2 of the Employment and Support Allowance (Transitional Provisions) 
Regulations 2008(f) (claim for existing award), in paragraph (2), omit sub-paragraphs (a), (b) and 
(c). 

Amendment of the Employment and Support Allowance Regulations 2008 

25. In regulation 144(2) of the Employment and Support Allowance Regulations 2008(g) 
(which sets out exceptions from the requirement to serve a period of waiting days at the beginning 
of a period of limited capability for work) — 



(a) Section 30A was inserted by section 1 ( 1 ) of the Incapacity for Work Act 1 994 (c. 1 8) and is to be repealed by paragraph 9(5) 
of the Welfare Reform Act 2007. Section 40 was substituted, and section 41 inserted, by paragraphs 8 and 9 of Schedule 1 
to the Incapacity for Work Act 1994 (c.18) and are to be repealed by Schedule 8 to the Welfare Reform Act 2007. 

(b) S.I. 2000/2958 (C. 89). 

(c) S.I. 1987/1967. Relevant amending instruments are S.I. 1996/206, 2000/1981 and 2006/718. The enactments referred to in 
regulation 23(c) are revoked, subject to savings, by S.I. 2009/3152 with effect from 30th December 2009. 

(d) S.I. 1987/1969. 

(e) S.I. 1995/310. 

(f) S.I. 2008/795. 

(g) S.I. 2880/794. Regulation 144(2)(d) was inserted by S.I. 2008/2428. 



130 



(a) omit the word "or" at the end of sub-paragraph (c); and 

(b) after sub-paragraph (d) insert — 

"or 

(e) if the claim had been made before 31st January 2011, the claimant would have 
been able to claim incapacity benefit, severe disablement allowance or income 
support by virtue of any saving revoked by regulation 24 of the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) Regulations 
2010.". 

Consequential amendments 

26. Schedule 4 (which makes amendments consequential on these Regulations) has effect. 

Signatory text 



Name 
Address Parliamentary Under Secretary of State 

Date Department for Work and Pensions 



SCHEDULES 



SCHEDULE 1 Regulation 6(1) 

Modification of enactments: making conversion decisions 

PART 1 
MODIFICATION OF PART 1 OF THE 2007 ACT 
1. Any reference to a claimant is to be read as if it were a reference to a notified person. 

2. — (1) Section 1 is to be read as if — 

(a) for subsection (2), there were substituted — 

"(2) Subject to the provisions of this Part, a notified person is entitled to an employment 
and support allowance if the person satisfies the basic conditions and either — 

(a) is entitled to an existing award of incapacity benefit or severe disablement 
allowance; or 

(b) is entitled to an existing award of income support and satisfies the conditions set 
out in Part 2 of Schedule 1 ."; and 

(b) subsection (3)(e) were omitted. 

3. Section 2 is to be read as if, in subsections (2)(a) and (3)(a), references to the assessment 
phase were to the conversion phase. 

4. Section 4 is to be read as if, in subsections (4)(a) and (5)(a), references to the assessment 
phase were to the conversion phase. 

5. Section 5 does not apply. 

6. Schedule 1 to the 2007 Act is to be read as if — 



131 



(a) paragraphs 1 to 5 were omitted; and 

(b) in paragraph 6, after sub-paragraph (1), there were inserted — 

"(1A) Paragraphs (IB) and (1C) apply in relation to any person ("P") whose existing 
award of income support is subject to conversion under the Employment and 
Support Allowance (Transitional Provisions) (Existing Awards) Regulations 2010 
("the 2010 Regulations"). 

(IB) In determining for the purposes of paragraph (l)(a) whether P's income exceeds 
the applicable amount, any amount to which P may become entitled by way of a 
transitional addition under Part 2 of the 2010 Regulations shall be disregarded. 

(1C) But where — 

(a) P's existing award would qualify for conversion under Part 2 of the 2010 
Regulations but for the fact that the condition set out in paragraph (l)(a) is not 
satisfied in P's case; and 

(b) P would otherwise be entitled to an amount of transitional addition under Part 2 of 
the 2010 Regulations as a result of carrying out Step 2, 

the condition set out in paragraph (l)(a) shall be treated as having been satisfied and the 
amount of employment and support allowance which applies to P as a result of Step 1 shall 
be nil.". 

PART 2 

MODIFICATION OF THE 2008 REGULATIONS 

7. Any reference to a claimant is to be read as if it were a reference to the notified person. 

8. Part 2 (which makes provision about the assessment phase) does not apply. 

9. Part 3 (which makes provision about contribution conditions which do not apply by virtue of 
modifications contained in these Regulations) does not apply. 

10. Regulation 30 (which provides for payment of the allowance pending determination of 
limited capability for work) does not apply. 

11. Regulation 75 (payments treated as not being payments to which section 3 of the 2007 Act 
applies) is to be read as if — 

(a) the existing provisions were renumbered as paragraph (1); 

(b) at the end of that paragraph there were inserted — 

"(g) any pension payment or PPF periodic payment which is made to a notified person 
and which falls within paragraph (2)."; and 

(c) after that paragraph there were inserted — 

"(2) This paragraph applies to any pension payment or PPF periodic payment made to the 
notified person where, immediately before the effective date of the person's conversion 
decision, section 30DD(1) of the Contributions and Benefits Act(a) (incapacity benefit: 
reduction for pension payments and PPF periodic payments) — 

(a) did not apply to the notified person by virtue of regulation 26 of the Social 
Security (Incapacity Benefit) Regulations 1994(b) (persons whose benefit is not to 
be reduced under section 30DD(1)); or 

(b) was not treated as applying to the notified person by virtue of — 

(i) regulation 19(l)(c) or (2)(c) of those Regulations (persons formerly entitled to 
severe disablement allowance); or 



(a) Section 30DD was inserted by section 63 of the Welfare Reform and Pensions Act 1999 (c.30) and amended by S.I. 
2006/343. 

(b) S.I. 1994/2946. 



132 



(ii) article 3 of the Welfare Reform and Pensions Act 1999 (Commencement 
No. 9, and Transitional and Savings Provisions) Order 2000(a) (transitional 
provision in relation to incapacity benefit).". 

12. Regulation 144 (requirement to serve a period of waiting days at the beginning of a period 
of limited capability for work) does not apply. 

PART 3 

MODIFICATION OF OTHER SECONDARY LEGISLATION 

Social Security (Claims and Payments) Regulations 1987 

13. Regulation 32 of the Social Security (Claims and Payments) Regulations 1987(b) is to be 
read as if it were modified so as to enable the Secretary of State to require from any person 
entitled to an existing award — 

(a) under paragraph (1), information or evidence for determining whether a decision on 
an existing award should be converted into an award of an employment and support 
allowance; and 

(b) under paragraph (1A), information or evidence in connection with payment of benefit 
in the event that an existing award is converted into an award of an employment and 
support allowance. 



SCHEDULE 2 Regulation 17(1) 

Modification of enactments: after the conversion phase 

PARTI 
MODIFICATION OF PART 1 OF THE 2007 ACT 

1. Any reference to a claimant is to be read as if it were a reference to a person in relation to 
whom a conversion decision has been made under these Regulations. 

2. Section 1 is to be read as if — 

(a) for subsection (2), there were substituted — 

"(2) Subject to the provisions of this Part, a person is entitled to an employment and 
support allowance if the person satisfies the basic conditions and — 

(a) in accordance with Part 2 of the Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010, the effect of the conversion 
decision that was made in relation to the person was to convert the person's 
existing award or awards into a single award of an employment and support 
allowance; and 

(b) that conversion decision has come into effect."; and 

(b) for subsection (7), there were substituted — 

"(7) In this Part — 

"contributory allowance" means an employment and support allowance to which a 
person is entitled by virtue of the Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010 which was based on an award of 
incapacity benefit or severe disablement allowance to which the person was entitled; 
and 



(a) S.I. 2000/2958. 

(b) S.I. 1987/1968. Regulation 32(1) and (1A) were inserted by S.I. 2003/1050. 



133 



"income-related allowance" means an employment and support allowance to which a 
person is entitled by virtue of the Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010 which was based on an award of 
income support to which the person was entitled.". 

3. Section 2 is to be read as if — 

(a) in subsection (l)(a), after the words "such amount" there were inserted ", or the 
aggregate of such amounts,"; and 

(b) in subsections (2)(a) and (3)(a), references to the assessment phase were to the 
conversion phase. 

4. Section 4 is to be read as if, in subsections (4)(a) and (5)(a), references to the assessment 
phase were to the conversion phase. 

5. Schedule 1 to the 2007 Act is to be read as if, in paragraph 6, after sub-paragraph (1), there 
were inserted — 

"(1A) Paragraphs (IB) and (1C) apply where any person ("P") is entitled by virtue of the 
Employment and Support Allowance (Transitional Provisions) (Existing Awards) 
Regulations 2010 ("the 2010 Regulations") to an employment and support allowance which 
is attributable to an income-related allowance. 

(IB) In determining for the purposes of paragraph (l)(a) whether P's income exceeds the 
applicable amount, the amount of any transitional addition to which P is entitled under the 
2010 Regulations shall be disregarded. 

(1C) Where— 

(a) P ceases to satisfy the condition set out in paragraph (l)(a); but 

(b) otherwise remains entitled to an amount by way of a transitional addition under the 
2010 Regulations, 

the condition set out in paragraph (l)(a) shall be treated as satisfied in P's case and the 
amount of income-related allowance to which P is entitled shall be the amount of the 
transitional addition.". 

PART 2 

MODIFICATION OF OTHER PRIMARY LEGISLATION 

Social Security Act 1998 

6. Schedule 3 to the Social Security Act 1998(a) (decisions against which an appeal lies) is to 
be read as if, after paragraph 8D, there were inserted — 

"Conversion of certain existing awards into awards of an employment and support allowance 

8E. A conversion decision within the meaning of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010.". 

Social Security Contributions and Benefits Act 1992 

7. Section 44B of the Social Security Contributions and Benefits Act 1992(b) (deemed earnings 
factors: 2010-11 onwards) is to be read as if, after subsection (5), there were inserted — 

"(5A) In determining whether Condition C is satisfied in relation to any pensioner, the 
following entitlements of the pensioner to an earnings factor credit may be aggregated if the 
weeks to which they relate comprise a continuous period — 

(a) any entitlement arising by virtue of section 44C(3)(d) below (eligibility for 
earnings factor enhancement in respect of a week in which long-term incapacity 
benefit was, or would have been, payable); and 



(a) 1998 (c.14). Paragraphs 8A to 8D of Schedule 3 were inserted by paragraph 12 of Schedule 1 to the State Pension Credit 
Act 2002 (c. 16). 

(b) 1992 c.4. Section 44B was inserted by section 9(1) of the Pensions Act 2007 (c.22) and amended by paragraph 5 of 
Schedule 1 to the National Insurance Act 2008 (c. 1 6). 



134 



(b) where an award of long-term capacity benefit was converted into an award of an 
employment and support allowance by virtue of the Employment and Support 
Allowance (Transitional Provisions) (Existing Awards) Regulations 2010, any 
entitlement arising by virtue of regulation 5A(2)(ba) of the Additional Pension and 
Social Security Pensions (Home Responsibilities) (Amendment) Regulations 
2001(a) (earnings factor credits eligibility for pensioners to whom employment 
and support allowance was payable).". 

PART 3 

MODIFICATION OF THE 2008 REGULATIONS 

8. Any reference to a claimant is to be read as if it were a reference to a person in relation to whom 
a conversion decision has been made under these Regulations. 

9. Part 2 (which makes provision about the assessment phase) does not apply. 

10. Part 3 (which makes provision about contribution conditions which do not apply by virtue of 
modifications contained in these Regulations) does not apply. 

11. The 2008 Regulations are to be read as if, after Part 3, there were substituted — 



"PART 4A 
APPEALS AGAINST CONVERSION DECISION 

Appeals against conversion decision 

18A. — (1) Paragraph (2) applies where — 

(a) a person has made and is pursuing an appeal against a conversion decision which 
embodies a determination that the person does not have limited capability for 
work; and 

(b) that appeal has not yet been determined by a first-tier tribunal constituted under 
Chapter 2 of Part 1 of the Tribunals, Courts and Enforcement Act 2007(b). 

(2) The person shall be treated in the same way as they would have been treated if they 
were appealing against a decision which — 

(a) was made on a claim for an employment and support allowance; and 

(b) embodies a determination that the claimant does not have limited capability for 
work. 

(3) Accordingly, if the person provides evidence of limited capability for work in 
accordance with the Medical Evidence Regulations, the person is to be treated as having 
limited capability for work until — 

(a) another determination is made as to whether or not the person has limited 
capability for work; 

(b) another determination is made as to whether or not the person is to be treated as 
having limited capability for work otherwise than by virtue of paragraph (2); or 

(c) the appeal is abandoned or fails by reason of its non-prosecution, 
whichever occurs first.". 

12. Regulation 30 (which provides for payment of the allowance pending determination of 
limited capability for work) is to be read as if, after paragraph (3), there were inserted — 



(a) S.I. 2001/1323. Regulation 5A was inserted by S.I. 2009/2206. The reference to regulation 5A(2)(d) is to the modification 
made by paragraph 25 of Schedule 2 to these Regulations. 

(b) 2007 c. 15. 



135 



"(4) Nothing in this regulation applies in any case falling within regulation 18A.". 

13. Regulation 45 (exempt work) is to be read as if, for the definition of "specified work" in 
paragraph ( 1 0), there were substituted — 

""specified work" means — 

(a) work done in accordance with paragraph (4); 

(b) work done in accordance with regulation 17(4)(a) of the Social Security 
(Incapacity for Work) (General) Regulations 1995(a); or 

(c) work done in accordance with regulation 17(1 A) of those Regulations, as then in 
force.". 

14. Regulation 67 (prescribed amounts) is to be read as if — 

(a) in paragraph (1), after sub-paragraph (c) there were inserted — 

"(d) the amount of any transitional addition to which the person is entitled under 
regulation 11 of the Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010."; 

(b) in paragraph (2), for the words from "is the amount" to the end, there were substituted 
are such of the following amounts as may apply in the person's case — 

"(a) the amount determined in accordance with paragraph 1(1) of Schedule 4; and 

(b) the amount of any transitional addition to which the person is entitled under 
regulation 10 or 18 of the Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010.". 

15. Regulation 68 (polygamous marriages) is to be read as if, in paragraph (1), after sub- 
paragraph (d) there were inserted — 

"(e) the amount of any transitional addition to which the person is entitled under 
regulation 1 1 of the Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010.". 

16. Regulation 75 (payments treated as not being payments to which section 3 of the 2007 
Act applies) is to be read subject to the same modifications as are specified in paragraph 11 of 
Schedule 1 to these Regulations. 

17. Schedule 5 (prescribed amounts in special case) is to be read as if any reference to the 
amount — 

(a) applicable to a person under regulation 67(l)(a); or 

(b) to which a person is entitled under regulation 67(1 )(a), 

included the amount of any transitional addition to which the person is entitled under regulation 
67(1 )(d) (see modification made by paragraph 14(a) of this Schedule). 

PART 4 

MODIFICATION OF OTHER SECONDARY LEGISLATION 

Social Security (Claims and Payments) Regulations 1987 

18. The Social Security (Claims and Payments) Regulations 1987(b) are to be read subject to 
the modifications set out in paragraphs 19 to 21 of this Schedule. 

19. Regulation 3 of (claims not required for entitlement to benefits in certain cases) is to be read 
as if, after paragraph (j), there were inserted — 



(a) S.I. 1995/311. Regulation 17(1A) was in force from 8th April 2002 to 9th April 2006. Regulation 17 was substituted by S.I. 
2006/757 with effect from 10th April 2006. 

(b) S.I. 1987/1968. Regulation 3(j) was inserted by S.I. 2008/1554. Regulation 32(1B) was inserted by S.I. 2003/1050 and 
amended by S.I. 2003/3209. Paragraphs 1(3) and 8(4)(a)(iv) of Schedule 9 were inserted by SI 2008/1554. 



136 



"(k) in the case of an employment and support allowance where the beneficiary is 
entitled to an existing award which is subject to conversion under the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) Regulations 
2010.". 

20. Regulation 32(1B) (information to be given and changes to be notified) is to be read as if — 

(a) the word "or" at the end of sub-paragraph (a) were omitted; and 

(b) after that sub-paragraph, there were inserted — 

"(ab) the amount of any transitional addition to which the beneficiary is entitled under 
the Employment and Support Allowance (Transitional Provisions) (Existing 
Awards) Regulations 2010; or". 

21. Schedule 9 (deductions from benefit and direct payments to third parties) is to be read as 
if— 

(a) in paragraph 1 (interpretation) — 

(i) in sub-paragraph (3), after the words ""employment and support allowance" 
means", there were inserted "(subject to sub-paragraph (4))"; and 

(ii) after sub-paragraph (3), there were inserted — 

"(4) In the application of sub-paragraph (3) to a beneficiary whose award of an 
employment and support allowance is by virtue of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010 ("the 2010 Regulations"), 
any reference to an employment and support allowance includes any transitional addition to 
which the beneficiary is entitled under those Regulations. 

(5) Where a specified benefit awarded to a beneficiary is subject to conversion under the 
2010 Regulations and — 

(a) immediately before the effective date of the conversion decision made in relation 
to the beneficiary, any deduction is being made in accordance with this Schedule 
from sums payable to the offender by way of the specified benefit; and 

(b) with effect from that date, the award of specified benefit is converted into an award 
of an employment and support allowance under the 2010 Regulations, 

any deduction falling within paragraph (a) shall have effect as a deduction from the 
employment and support allowance to which the beneficiary is entitled.". 

(b) in paragraph 8 — 

(i) in sub-paragraph (4), for paragraph (a)(iv), there were substituted — 

"(iv) in the case of an employment and support allowance, the applicable amount 
for the family as is awarded under the provisions specified in sub-paragraph 
(5); or"; and 

(ii) after sub-paragraph (4) there were inserted — 

"(5) The specified provisions are — 

(a) where the person is entitled to an employment and support allowance by virtue of 
the Employment and Support Allowance (Transitional Provisions) (Existing 
Awards) Regulations 2010 ("the 2010 Regulations")— 

(i) paragraph (l)(a), (b) and (d) of regulation 67 (prescribed amounts); or 

(ii) paragraph (l)(a), (b), (c) and (e) of regulation 68 (polygamous marriages), 

of the Employment and Support Allowance Regulations (as modified by 
paragraphs 14 and 15 of Schedule 2 to the 2010 Regulations); and 

(b) in any other case, paragraph (l)(a) and (b) of regulation 67 or paragraph (l)(a) to 
(c) of regulation 68 of the Employment and Support Allowance Regulations.". 



137 



Community Charges (Deductions from Income Support) (No. 2) Regulations 1990 

22. Regulation 1 of the Community Charges (Deductions from Income Support) (No. 2) 
Regulations 1990(a) (citation, commencement and interpretation) is to be read as if, after 
paragraph (2), there were inserted — 

"(2A) In the application of these Regulations to a debtor whose entitlement to an 
employment and support allowance is by virtue of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010 ("the 2010 Regulations"), 
any reference to an employment and support allowance includes any transitional addition to 
which the debtor is entitled under those Regulations. 

(2B) Where a debtor's award of income support is subject to conversion under the 2010 
Regulations and — 

(a) immediately before the effective date of the conversion decision made in relation 
to the debtor, any deduction is being made under these Regulations from sums 
payable to the debtor by way of income support; and 

(b) with effect from that date, the award of income support is converted into an award 
of an employment and support allowance under the 2010 Regulations, 

any deduction falling within sub-paragraph (a) shall have effect as a deduction from the 
employment and support allowance to which the debtor is entitled.". 

Fines (Deductions from Income Support) Regulations 1992 

23. Regulation 1 of the Fines (Deductions from Income Support) Regulations 1992(b) (citation, 
commencement and interpretation) is to be read as if, after paragraph (2), there were inserted — 

"(2A) In the application of these Regulations to an offender whose entitlement to an 
employment and support allowance is by virtue of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010 ("the 2010 Regulations"), 
any reference to an employment and support allowance includes any transitional addition to 
which the offender is entitled under those Regulations. 

(2B) Where an offender's award of income support is subject to conversion under the 
2010 Regulations and — 

(a) immediately before the effective date of the conversion decision made in relation 
to the offender, any deduction is being made under these Regulations from sums 
payable to the offender by way of income support; and 

(b) with effect from that date, the award of income support is converted into an award 
of an employment and support allowance under the 2010 Regulations, 

any deduction falling within sub-paragraph (a) shall have effect as a deduction from the 
employment and support allowance to which the offender is entitled.". 

Council Tax (Deductions from Income Support) Regulations 1993 

24. Regulation 1 of the Council Tax (Deductions from Income Support) Regulations 1993(c) 
(citation, commencement and interpretation) is to be read as if, after paragraph (2), there were 
inserted — 

"(2A) In the application of these Regulations to a debtor whose entitlement to an 
employment and support allowance is by virtue of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010 ("the 2010 Regulations"), 



(a) S.I. 1990/545. These Regulations lapsed on the repeal of the enabling authority, as from 1st April 1993, except in relation to 
any community charge in respect of a day falling before that date or in relation to any financial year beginning before that 
date. 

(b) S.I. 1992/2182. S.I. 2008/1554 added an employment and support allowance to the benefits from which deductions may be 
made, inserted definitions of "contributory employment and support allowance", "income related employment and support 
allowance" and made other relevant amendments. 

(c) S.I. 1993/494. S.I. 2008/1554 added an employment and support allowance to the benefits from which deductions may be 
made, inserted definitions of "contributory employment and support allowance", "income related employment and support 
allowance" and made other relevant amendments. 



138 



any reference to an employment and support allowance includes any transitional addition to 
which the debtor is entitled under those Regulations. 

(2B) Where a debtor's award of income support is subject to conversion under the 2010 
Regulations and — 

(a) immediately before the effective date of the conversion decision made in relation 
to the debtor, any deduction is being made under these Regulations from sums 
payable to the debtor by way of income support; and 

(b) on that date, the award of income support is converted into an award of an 
employment and support allowance under the 2010 Regulations, 

any deduction falling within sub-paragraph (a) shall have effect as a deduction from the 
employment and support allowance to which the debtor is entitled.". 
Additional Pension and Social Security Pensions (Home Responsibilities) (Amendment) Regulations 

2001 

25. Regulation 5A of the Additional Pension and Social Security Pensions (Home 
Responsibilities) (Amendment) Regulations 2001(a) is to be read as if — 

(a) the word "or" at the end of paragraph (2)(b) were omitted; and 

(b) after that paragraph (2)(b), there were inserted — 

"(ba)that allowance was an employment and support allowance to which the pensioner 
was entitled by virtue of the Employment and Support Allowance (Transitional 
Provisions) (Existing Awards) Regulations 2010 and either — 

(i) long-term incapacity benefit was payable to the pensioner immediately before 
its conversion into an employment and support allowance in accordance with 
those Regulations; or 

(ii) the condition in sub-paragraph (b) was satisfied; or ". 



SCHEDULE 3 Regulation 17(2)(e)(i) 

List of regulations that apply after the conversion phase 

The regulations referred to in regulation 1 7(2)(e)(i) are — 

The Social Security (Benefit) (Married Women and Widows Special Provisions) Regulations 
1974(b) 

The Social Security (Benefit) (Members of the Forces) Regulations 1975(c) 

The Social Security (Airmen's Benefits) Regulations 1975(d) 

The Social Security (Mariners' Benefits) Regulations 1975(e) 

The Social Security (Credits) Regulations 1975(f) 

The Social Security (Medical Evidence) Regulations 1976(g) 

The Social Security (Overlapping Benefits) Regulations 1979(h) 

The Statutory Sick Pay (General) Regulations 1982(i) 



(a) 


S.I 


2001/1323. Regulation 5A was inserted by S.I. 2009/2206 


(b) 


S.I 


1974/2010. 


(c) 


S.I 


1975/493. 


(d) 


S.I 


1975/494. 


(e) 


S.I 


1975/529. 


(f) 


S.I 


1975/556. 


(g) 


S.I 


1976/615. 


(h) 


S.I 


1979/597. 


(i) 


S.I 


1982/894. 



139 



The Statutory Maternity Pay (General) Regulations 1986(a) 

The Income Support (General) Regulations 1987(b) 

The Social Security (Claims and Payments) Regulations 1987(c) 

The Social Fund (Recovery by Deductions from Benefits) Regulations 1988(d) 

The Social Security (Payments on Account, Overpayments and Recovery) Regulations 
1988(e) 

The Social Fund Cold Weather Payments (General) Regulations 1988(f) 

The Community Charges (Deductions from Income Support) (No. 2) Regulations 1990(g) 

The Child Support (Maintenance Assessment Procedure) Regulations 1992(h) 

The Child Support (Maintenance Assessments and Special Cases) Regulations 1992(f) 

The Fines (Deductions from Income Support) Regulations 1992(j) 

The Council Tax (Deductions from Income Support) Regulations 1993(k) 

The Jobseeker's Allowance Regulations 1996(1) 

The Social Security Benefits (Maintenance Payments and Consequential Amendments) 
Regulations 1996(m) 

The Child Support Departure Direction and Consequential Amendments Regulations 1996(n) 

The Social Security and Child Support (Decisions and Appeals) Regulations 1999(o) 

The Social Security (Immigration and Asylum) Consequential Amendments Regulations 
2000(p) 

The Social Fund Winter Fuel Payment Regulations 2000(q) 

The Child Support (Maintenance Calculations and Special Cases) Regulations 2000(r) 

The Child Support (Variations) Regulations 2000(s) 

The Child Support (Maintenance Calculation Procedure) Regulations 2000(t) 

The Social Security (Crediting and Treatment of Contributions, and National Insurance 
Numbers) Regulations 200 l(u) 

The Children (Leaving Care) Social Security Benefits Regulations 200 l(v) 

The Social Security (Loss of Benefit) Regulations 200 l(w) 

The State Pension Credit Regulations 2002(x) 

The Social Security (Jobcentre Plus Interviews for Partners) Regulations 2003(y) 

The Age-Related Payments Regulations 2005(x) 



(a) 


S.I 


1986/1960 


(b) 


S.I 


1987/1967 


(c) 


S.I 


1987/1968 


(d) 


S.I 


1988/35. 


(e) 


S.I 


1988/664. 


(f) 


S.I 


1988/1724 


(g) 


S.I 


1990/545. 


(h) 


S.I 


1992/1813 


(i) 


S.I 


1992/1815 


(J) 


S.I 


1992/2182 


(k) 


S.I 


1993/494. 


(1) 


S.I 


1996/207. 


(m) 


S.I 


1996/940. 


<n) 


S.I 


1996/2907 


(o) 


S.I 


1999/991. 


(P) 


S.I 


2000/636. 


(q) 


S.I 


2000/729. 


(r) 


S.I 


2001/155. 


(s) 


S.I 


2001/156. 


(t) 


S.I 


2001/157. 


(ii) 


S.I 


2001/769. 


(v) 


S.I 


2001/3074 


(w) 


S.I 


2001/4022 


(X) 


S.I 


2002/1792 


(y) 


S.I 


2003/1886 


(z) 


S.I 


2005/1983 



140 



The Social Fund Maternity and Funeral Expenses (General) Regulations 2005(a) 



SCHEDULE 4 Regulation 26 

Consequential amendments 

The Social Security (Claims and Payments) Regulations 1987 

1. In paragraph 8 of Schedule 9 to the Social Security (Claims and Payments) Regulations 
1987(b) (deductions from benefit and direct payments to third parties), in sub-paragraph (4), for 
paragraph (a)(iv) substitute — 

"(iv) in the case of an employment and support allowance, the applicable amount 
for the family as is awarded under paragraph (l)(a) and (b) of regulation 67 
(prescribed amounts) or paragraph (l)(a) to (c) of regulation 68 (polygamous 
marriages) of the Employment and Support Allowance Regulations; or". 
The Employment and Support Allowance (Transitional Provisions) Regulations 2008 

2. In regulation 2(3) of the Employment and Support Allowance (Transitional Provisions) 
Regulations 2008(c), omit the words "severe disablement allowance,". 

EXPLANATORY NOTE 

(This note is not part of the Order) 

These Regulations make transitional provision in relation to the introduction of employment 
and support allowance and apply to persons entitled to any existing award (which is defined in 
Schedule 4 to the Welfare Reform Act 2007 in terms of incapacity benefit, severe disablement 
allowance and income support on grounds of disability). The Regulations set out the process 
for determining whether existing awards are to be converted into awards of an employment and 
support allowance. An award may be converted only if certain conditions are satisfied in relation 
to the person entitled to the award. 

Part 2 of, and Schedule 1 to, the Regulations set out the process for determining whether or not a 
person's existing award is to be converted into an award of an employment and support allowance. 
The conversion process operates on an individual basis and, in each case, begins when the 
Secretary of State sends a notice under regulation 4 to a particular person. Where the person is 
entitled to more than one existing award the notice and conversion process apply to both awards. 
Regulation 5 requires the Secretary of State to determine whether or not the existing award (or 
awards) qualify for conversion and to notify the person accordingly. There is also provision for 
notification to be given in the event that an existing award ceases to be subject to conversion. 
Regulation 6 and Schedule 1 establish the statutory machinery to facilitate this determination, by 
cross-applying certain enactments that already have effect in relation to persons who make a claim 
for an employment and support allowance. Schedule 1 modifies these enactments to take account 
of the differences that arise because a person is already entitled to an existing award and is not 
required to make a claim. There is also provision to enable the Secretary of State to obtain 
information in order to make conversion decisions and to provide for conversion decisions to be 
revised before they come into effect. 

Under regulation 7, a person's existing award (or awards) qualify for conversion if the person 
satisfies the basic conditions for entitlement to an employment and support allowance, except for 
the condition that they are not entitled to income support. One of these basic conditions is that the 
person has limited capability for work. This will be determined on an individual basis, in 



(a) S.I. 2005/3061. 

(b) Paragraph 8(4)(a)(iv) of Schedule 9 was inserted by SI 2008/1 554. 

(c) S.I. 2008/795. Regulation 2(2) was amended by S.I. 2008/2783. 



141 



accordance with the arrangements for work capability assessments set out in the Employment and 
Support Allowance Regulations 2008 (as modified by Schedule 1 to these Regulations). 

If an existing award (or awards) do qualify for conversion, the Secretary of State must determine 
in accordance with regulations 8 to 13 the amount to which the person is entitled. In broad 
terms, this is the aggregate of (a) the amount to which the person would have been entitled on a 
successful claim for an employment and support allowance, and (b) an additional amount, referred 
to in the Regulations as a "transitional addition". The transitional addition is based on the 
difference between specified elements of the person's existing award and specified elements of the 
employment and support allowance into which it is to be converted. 

The date on which the Secretary of State's decision about conversion comes into effect is provided 
for in regulation 14, and regulations 15 and 16 set out the consequences that follow from the 
decision. Where the decision is that a person's award (or awards) do qualify for conversion, 
regulation 15 converts them into a single award of employment and support allowance. Where the 
decision is that a person's existing award (or awards) do not qualify, regulation 16 provides that 
the award (or awards) terminate immediately before the effective date of the conversion decision. 

Part 3 of, and Schedules 2 and 3 to, the Regulations set out the framework which has effect in 
relation to any person with effect from the effective date of their conversion decision under Part 2 
of the Regulations. In relation to any matter to be determined in connection with a person's 
entitlement to an employment and support allowance (including a decision not to convert an 
award), regulation 17 and Schedules 2 and 3 cross-apply the enactments that already have effect in 
relation to an employment and support allowance made on a claim. This includes provision for 
revision, supersession and appeals in connection with conversion decisions which have come into 
effect. There are modifications of these enactments in Schedule 2. Regulations 18 to 23 make 
further provision about the transitional addition: regulation 18 provides for a review in certain 
cases where a person ceases to be entitled to an income-related employment and support 
allowance, regulations 19 to 21 set out the circumstances in which the amount is to be reduced and 
regulation 22 provide for termination when the amount is reduced to nil, when the person ceases to 
be entitled to an employment and support allowance or 5th April 2020 (whichever occurs first). 

Part 4 of the Regulations contains miscellaneous provisions, including provision in regulation 24 
which revokes the saving in regulation 2(2)(a), (b) and (c) of the Employment and Support 
Allowance (Transitional Provisions) Regulations 2008. This saving enables a person previously 
entitled to incapacity benefit, severe disablement allowance or income support on grounds of 
disability to make a repeat (linked) claim for that benefit in certain circumstances, rather than 
having to make a new claim for employment and support allowance. The revocation of this saving 
comes into force on 31st January 2011. Regulation 25 amends regulation 144 of the Employment 
and Support Allowance Regulations 2008 so that a person does not have to serve a period of 
waiting days in relation to a new claim for employment and support allowance if that person 
would have benefited from the saving revoked by regulation 24 if they had made a claim before 
31st January 2011. 



142 



APPENDIX 3 

THE HOUSING BENEFIT AND COUNCIL TAX BENEFIT (EMPLOYMENT 
AND SUPPORT ALLOWANCE) AMENDMENT REGULATIONS 2010 



STATUTORY INSTRUMENTS 

2010 No. 

SOCIAL SECURITY 

The Housing Benefit and Council Tax Benefit (Employment and 
Support Allowance) Amendment Regulations 2010 

Made - *** 

Laid before Parliament *** 

Coming into force - - 1st October 2010 

The Secretary of State for Work and Pensions makes the following Regulations in exercise of the 
powers conferred by sections 123(l)(d) and (e), 135(1), 137(1) and 175(1) of the Social Security 
Contributions and Benefits Act 1992(a) and paragraphs 4(4) and (6), 20(1) and 23(1) of Schedule 
7 to the Child Support, Pensions and Social Security Act 2000(b). 

[In accordance with section 173(l)(b)(c) of the Social Security Administration Act 1992, the 
Secretary of State has obtained the agreement of the Social Security Advisory Committee that 
proposals in respect of these Regulations should not be referred to it.] 

[In accordance with section 172(1) of the Social Security Administration Act 1992, the Secretary 
of State has referred these Regulations to the Social Security Advisory Committee.] 

[In accordance with section 176(1) of the Social Security Administration Act 1992, the Secretary 
of State has consulted with organisations appearing to him to be representative of the authorities 
concerned.] 

Citation and commencement 

1. These Regulations may be cited as the Housing Benefit and Council Tax Benefit 
(Employment and Support Allowance) Amendment Regulations 2010 and shall come into force 
on 1st October 2010. 



(a) 1992 c. 4. Section 123(l)(e) was substituted by the Local Government Finance Act 1992 (c. 14), Schedule 9, paragraph 
1(1). Section 137(1) is an interpretation provision and is cited for the definition of "prescribed". Section 175(1) was 
amended by the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2), Schedule 3, paragraph 29. 

(b) 2000 c. 19. Paragraph 23(1) is an interpretation provision and is cited for the definition of "prescribed". 

(c) 1992 c. 5. 



143 



Amendment of the Housing Benefit Regulations 2006 

2. — (1) The Housing Benefit Regulations 2006(a) are amended as follows. 

(2) In regulation 22(b) (applicable amounts) after sub-paragraph (e) add — 

"(f) the amount of any transitional addition which may be applicable to him in 
accordance with Parts 7 and 8 of Schedule 3 (transitional addition).". 

(3) In regulation 23(c) (polygamous marriages) after sub-paragraph (f) add — 

"(g) the amount of any transitional addition which may be applicable to him in 
accordance with Parts 7 and 8 of Schedule 3 (transitional addition).". 

(4) In Schedule 3 (applicable amounts) — 

(a) after paragraph 2 1 (d) insert 

"21A. — (1) Subject to paragraph 22, the claimant is entitled to one, but not both, of the 
components in paragraphs 23 and 24 if the claimant or his partner is entitled to a converted 
employment and support allowance. 

(2) In this paragraph and in Parts 7 and 8 "converted employment and support allowance" 
means an award of benefit converted to an employment and support allowance in 
accordance with regulation 5(2)(a) of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010."; 

(b) after Part 6(e) add — 



"Part 7 
Transitional Addition 

27. — (1) The claimant is entitled to the transitional addition calculated in accordance with 
paragraph 28 where the claimant or the claimant's partner ("the relevant person") — 

(a) is entitled to a converted employment and support allowance; or 

(b) is treated as having limited capability for work by virtue of regulation 18A(3)(f) of 
the Employment and Support Allowance Regulations, 

unless the employment and support allowance is income-related or the amount of the 
transitional addition calculated in accordance with paragraph 28 would be nil. 

(2) Subject to paragraphs (3) and (4), the claimant's entitlement to a transitional addition 
will end on whichever is the earliest of — 

(a) the reduction of the transitional addition to nil in accordance with paragraph 29; 

(b) the termination of the claimant's award of housing benefit; 

(c) the relevant person ceasing to meet the requirements of paragraph (l)(a) or (b), as 
the case may be; 

(d) 5th April 2020. 

(3) Where the claimant's entitlement to a transitional addition has ended by virtue of 
paragraph (2)(b), the claimant will be entitled to the transitional addition that would have 
applied had the claimant's entitlement to a transitional addition not ended where — 



(a) S.I. 2006/213. 

(b) Regulation 22 was amended by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(c) Regulation 23 was amended by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(d) Paragraph 21 was inserted by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(e) Part 6 was inserted by S.I. 2008/1082 (as amended by S.I. 2008/2428). 
(t) Regulation 18Awas inserted by S.I. 2010/[ ]. 



144 



(a) the claimant subsequently becomes entitled to housing benefit not more than 12 
weeks after the award of housing benefit was terminated and during that period the 
relevant person was — 

(i) entitled to an employment and support allowance or, as the case may be, 
treated as having limited capability for work by virtue of regulation 18A(3) of 
the Employment and Support Allowance Regulations; or 

(ii) was treated as having limited capability for work in accordance with 
regulation 145(1) of the Employment and Support Allowance Regulations; or 

(b) the claimant subsequently becomes entitled to housing benefit not more than 104 
weeks after the award of housing benefit was terminated and during that period the 
relevant person was treated as having limited capability for work in accordance 
with regulation 145(2) Employment and Support Allowance Regulations. 

(4) Where— 

(a) the claimant's entitlement to a transitional addition has ended by virtue of 
paragraph (2)(c); 

(b) the relevant person subsequently becomes entitled to an employment and support 
allowance; and 

(c) the relevant person is treated as having limited capability for work in accordance 
with regulation 145(1) or (2) of the Employment and Support Allowance 
Regulations during the period between the events in paragraphs (a) and (b), 

from the date that the subsequent award of an employment and support allowance takes 
effect, the claimant will be entitled to the transitional addition that would have applied had 
the claimant's entitlement to a transitional addition not ended. 



Part 8 

Amount of transitional addition 

28. — (1) Subject to paragraph 29, the amount of the transitional addition is the amount by 
which Amount A exceeds Amount B. 

(2) Where a conversion decision as described in regulation 5(2)(a) of the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) Regulations 2010 is 
made in respect of the relevant person — 

(a) Amount A is the basic amount that would have applied on the day that decision took 
effect had that decision not been made; and 

(b) Amount B is the basic amount that applied on that day as a result of that decision. 

(3) Where the relevant person is treated as having limited capability for work by virtue of 
regulation 18A(3) of the Employment and Support Allowance Regulations — 

(a) Amount A is the basic amount that would have applied on the day that person was 
first treated as having limited capability for work if the person had not been so 
treated; and 

(b) Amount B is the basic amount that applied on that day as a result of that person 
being so treated. 

29. — (1) Where there is a change of circumstances which leads to an increase in the 
claimant's basic amount, the transitional addition that applies immediately before the 
change of circumstances shall be reduced by the amount by which Amount C exceeds 
Amount D. 

(2) Amount C is the basic amount that applies on the day the change of circumstances 
takes effect. 

(3) Amount D is the basic amount that applied immediately before the change of 
circumstances. 

(4) In this paragraph and paragraph 28, "basic amount" means the aggregate of such 
amounts as may apply in the claimant's case in accordance with regulation 22(a) to (e) or 
regulation 23(a) to (f).". 



145 



Amendment of the Council Tax Benefit Regulations 2006 

3. — (1) The Council Tax Benefit Regulations 2006(a) are amended as follows. 

(2) In regulation 12(b) (applicable amounts) after sub-paragraph (e) add — 

"(f) the amount of any transitional addition which may be applicable to him in 
accordance with Parts 7 and 8 of Schedule 1 (transitional addition).". 

(3) In regulation 13(c) (polygamous marriages) after sub-paragraph (f) add — 

"(g) the amount of any transitional addition which may be applicable to him in 
accordance with Parts 7 and 8 of Schedule 1 (transitional addition).". 

(4) In Schedule 1 (applicable amounts) — 

(a) after paragraph 2 1 (d) insert 

"21A. — (1) Subject to paragraph 22, the claimant is entitled to one, but not both, of the 
components in paragraphs 23 and 24 if the claimant or his partner is entitled to a converted 
employment and support allowance. 

(2) In this paragraph and in Parts 7 and 8 "converted employment and support allowance" 
means an award of benefit converted to an employment and support allowance in 
accordance with regulation 5(2)(a) of the Employment and Support Allowance 
(Transitional Provisions) (Existing Awards) Regulations 2010."; 

(b) after Part 6(e) add — 



"Part 7 
Transitional Addition 

27. — (1) The claimant is entitled to the transitional addition calculated in accordance with 
paragraph 28 where the claimant or the claimant's partner ("the relevant person") — 

(a) is entitled to a converted employment and support allowance; or 

(b) is treated as having limited capability for work by virtue of regulation 18A(3)(f) of 
the Employment and Support Allowance Regulations, 

unless the employment and support allowance is income-related or the amount of the 
transitional addition calculated in accordance with paragraph 28 would be nil. 

(2) Subject to paragraphs (3) and (4), the claimant's entitlement to a transitional addition 
will end on whichever is the earliest of — 

(a) the reduction of the transitional addition to nil in accordance with paragraph 29; 

(b) the termination of the claimant's award of council tax benefit; 

(c) the relevant person ceasing to meet the requirements of paragraph (l)(a) or (b), as 
the case may be; 

(d) 5th April 2020. 

(3) Where the claimant's entitlement to a transitional addition has ended by virtue of 
paragraph (2)(b), the claimant will be entitled to the transitional addition that would have 
applied had the claimant's entitlement to a transitional addition not ended where — 



(a) S.I. 2006/215. 

(b) Regulation 12 was amended by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(c) Regulation 13 was amended by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(d) Paragraph 21 was inserted by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(e) Part 6 was inserted by S.I. 2008/1082 (as amended by S.I. 2008/2428). 
(t) Regulation 18Awas inserted by S.I. 2010/[ ]. 



146 



(a) the claimant subsequently becomes entitled to council tax benefit not more than 12 
weeks after the award of council tax benefit was terminated and during that period 
the relevant person was — 

(i) entitled to an employment and support allowance or, as the case may be, 
treated as having limited capability for work by virtue of regulation 18A(3) of 
the Employment and Support Allowance Regulations; or 

(ii) was treated as having limited capability for work in accordance with 
regulation 145(1) of the Employment and Support Allowance Regulations; or 

(b) the claimant subsequently becomes entitled to council tax benefit not more than 
1 04 weeks after the award of council tax benefit was terminated and during that 
period the relevant person was treated as having limited capability for work 
in accordance with regulation 145(2) Employment and Support Allowance 
Regulations. 

(4) Where— 

(a) the claimant's entitlement to a transitional addition has ended by virtue of 
paragraph (2)(c); 

(b) the relevant person subsequently becomes entitled to an employment and support 
allowance; and 

(c) the relevant person is treated as having limited capability for work in accordance 
with regulation 145(1) or (2) of the Employment and Support Allowance 
Regulations during the period between the events in paragraphs (a) and (b), 

from the date that the subsequent award of an employment and support allowance takes 
effect, the claimant will be entitled to the transitional addition that would have applied had 
the claimant's entitlement to a transitional addition not ended. 



Part 8 

Amount of transitional addition 

28. — (1) Subject to paragraph 29, the amount of the transitional addition is the amount by 
which Amount A exceeds Amount B. 

(2) Where a conversion decision as described in regulation 5(2)(a) of the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) Regulations 2010 is 
made in respect of the relevant person — 

(a) Amount A is the basic amount that would have applied on the day that decision 
took effect had that decision not been made; and 

(b) Amount B is the basic amount that applied on that day as a result of that decision. 

(3) Where the relevant person is treated as having limited capability for work by virtue of 
regulation 18A(3) of the Employment and Support Allowance Regulations — 

(a) Amount A is the basic amount that would have applied on the day that person was 
first treated as having limited capability for work if the person had not been so 
treated; and 

(b) Amount B is the basic amount that applied on that day as a result of that person 
being so treated. 

29. — (1) Where there is a change of circumstances which leads to an increase in the 
claimant's basic amount, the transitional addition that applies immediately before the 
change of circumstances shall be reduced by the amount by which Amount C exceeds 
Amount D. 

(2) Amount C is the basic amount that applies on the day the change of circumstances 
takes effect. 



147 



(3) Amount D is the basic amount that applied immediately before the change of 
circumstances. 

(4) In this paragraph and paragraph 28, "basic amount" means the aggregate of such 
amounts as may apply in the claimant's case in accordance with regulation 22(a) to (e) or 
regulation 23(a) to (f).". 

Amendment of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) 
Regulations 2001 

4. — (1) The Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 
2001(a) are amended as follows. 

(2) In regulation 7(2) — 

(a) in paragraph (i)(b) after "paragraph (o)" insert "(p) or (q)"; 

(b) after paragraph (o)(c) add — 

"(p) where — 

(i) the claimant has been awarded entitlement to housing benefit or council tax 
benefit; 

(ii) the claimant or the claimant's partner has had an award of benefit converted to 
an employment and support allowance in accordance with regulation 5(2)(a) 
of the Employment and Support Allowance (Transitional Provisions) 
(Existing Awards) Regulations 2010; and 

(iii) subsequent to the first day of the period to which that entitlement to housing 
benefit or council tax benefit relates, the Secretary of State makes a decision 
to supersede the award of employment and support allowance to award a 
different component; 

(q) where the claimant has been awarded entitlement to housing benefit or council tax 
benefit and subsequent to the first day of the period to which that entitlement 
relates — 

(i) a conversion decision within the meaning of regulation 5(2)(a) of the 
Employment and Support Allowance (Transitional Provisions) (Existing 
Awards) Regulations 2010 takes effect in respect of the claimant or the 
claimant's partner; or 

(ii) the claimant is treated as having limited capability for work by virtue of 
regulation 18A(2) of the Employment and Support Allowance Regulations.". 

(3) In regulation 8 — 

(a) in paragraph (14D)(d) after "regulation 7(2)(o)" insert "or (p)"; 

(b) after paragraph (14D) insert — 

"(14E) Where a decision is superseded in accordance with regulation 7(2)(q) the decision 
shall take effect — 

(a) where the decision made in accordance with the Employment and Support 
Allowance (Transitional Provisions) (Existing Awards) Regulations 2010 takes 
effect on or after 1 st April in any year but before 1 5th April of that year — 

(i) from 1 st April for a council tax benefit award; 

(ii) from 1st April for a housing benefit award in which the claimant's weekly 
amount of eligible rent falls to be calculated in accordance with regulation 
80(2)(b) or (c) of the Housing Benefit Regulations or, as the case may be, 
regulation 61(2)(b) or (c) of the Housing Benefit (State Pension Credit) 
Regulations; 



(a) S.I. 2001/1002 

(b) Paragraph (i) was inserted by S.I. 2003/2275 and amended by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(c) Paragraph (o) was inserted by S.I. 2008/1082 (as amended by S.I. 2008/2428). 

(d) Paragraph (14D) was inserted by S.I. 2008/1082 (as amended by S.I. 2008/2428). 



148 



(iii) from the first Monday in April for a housing benefit award to which paragraph 
(a)(i) does not apply; 

(b) in any other case from the day decision made in accordance with the Employment 
and Support Allowance (Transitional Provisions) (Existing Awards) Regulations 
2010 takes effect". 

Signed by authority of the Secretary of State for Work and Pensions 

Name 

Parliamentary Under Secretary of State, 

Date Department for Work and Pensions 

EXPLANATORY NOTE 

(This note is not part of the Regulations) 

These Regulations amend the Housing Benefit Regulations 2006, Council Tax Benefit 
Regulations 2006 and the Housing Benefit and Council Tax Benefit (Decisions and Appeals) 
Regulations 2001 ("the Decisions and Appeals Regulations") . 

Regulation 2 amends the Housing Benefit Regulations 2006 to make provision for a transitional 
addition to a claimant's applicable amount where the claimant or the claimant's partner has had an 
award of benefit converted to an employment and support allowance in accordance with the 
Employment and Support Allowance (Transitional Provisions) (Existing Awards) Regulations 
2010. This will ensure that the claimant's applicable amount for housing benefit purposes will not 
decrease because an existing benefit has been converted to an employment and support allowance 
or because a person has appealed a decision not to convert an existing benefit to an employment 
and support allowance. 

Regulation 3 makes equivalent amendment to the Council Tax Benefit Regulations 2006. 

Regulation 4 amends the Decisions and Appeals Regulations to make provision for the 
supersession of awards where the claimant or the claimant's partner has had an award of benefit 
converted to an employment and support allowance or is treated as having limited capability for 
work while appealing a decision not to convert an existing award of benefit. This will take effect 
for housing benefit and council tax benefit purposes from the date of the decision to convert the 
award unless this occurs in the first two weeks of April. In this case, the supersession will take 
effect on the same day that housing benefit and council tax benefit are up-rated. 

Regulation 4 also amends regulation 7 of the Decisions and Appeals Regulations to allow for the 
supersession of housing benefit or council tax benefit where the claimant or the claimant's partner 
has had an award of benefit or credits converted to an employment and support allowance and 
there is a later change to the employment and support allowance component . 

A full impact assessment has not been produced for this instrument as it has no impact on the 
private or voluntary sectors. 



149 



APPENDIX 4 

EXPLANATION OF THE EMPLOYMENT AND SUPPORT ALLOWANCE 
(TRANSITIONAL PROVISIONS) (EXISTING AWARDS) REGULATIONS 2010 

PART 1 - GENERAL 

Regulation 1 - cites two commencement dates. The principal date is 
1 October 2010 - this is the date on or after which the exercise to convert 
customers in receipt of "existing awards" (see regulation 3) onto ESA may 
commence in any particular case. In other words, it is the date on or after which 
the first notices relating to the conversion process will be issued (see regulation 
4). The secondary date is 31 January 2011 - this is the date on or after which 
all new claims to incapacity benefits will automatically be treated as a claim for 
ESA, regardless of the period for which the claim is made, and regardless of 
whether the claim may otherwise have linked back to an earlier claim for an 
incapacity benefit (see regulation 24). 

Regulation 2 - provides the normal interpretation of references within the text 
of the Regulations 

Regulation 3 - defines the customers who will undergo the conversion process, 
namely all recipients in receipt of an "existing award" as defined in the Welfare 
Reform Act 2007 ie awards of incapacity benefit (IB), severe disablement 
allowance (SDA) and income support (IS) where paid on the grounds of 
incapacity 

PART 2 - CONVERSION DECISIONS 

Regulation 4 - provides for the issue of notices to customers, thereby 
commencing the "conversion phase". The notices will inform the customers 
that they are subject to the conversion process, and of the conditions to be 
satisfied and with which they must comply. Non-compliance will result in 
termination of their existing awards. No notice will be issued to customers 
approaching state pension age (paragraph (5)(a) or to SDA customers over 
state pension age - these customers will not undergo the conversion process. 

Regulation 5 - provides for decision as to whether an existing award will qualify 
for conversion, and for the issue of "conversion decisions". The conversion 
phase ends on the day before the effective date of the conversion decision - 
(regulation 14 provides for a gap of between 2 and 4 weeks between the date 
of the decision and its effective date) - or earlier, if the claimant ceases to be 
entitled to an existing award. [This might apply where an IS customer with a 
second condition of entitlement decides to opt out of the conversion process 
and stay on IS. If they opt to remain on IS, their award of IS will continue, but 
any disability premium in payment will be removed (where it was awarded 
solely on the basis of the claimant's incapacity - not where they have entitlement 
to a disability premium on any other grounds)] 

Regulation 6 - the nature of a "converted award" of ESA is distinct from that of 
a standard award of ESA (because the customer is already entitled to an 



150 



existing award and is not required to make a claim). This regulation provides for 
the application of the existing primary and secondary legislation, with the 
modifications specified in Schedule 1, to accommodate the distinction. 

In Schedule 1, in particular - 

paragraph 6 dis-applies the condition in paragraph 6(1 )(a) of Schedule 1 
to the Welfare Reform Act 2007, which prevents awards of income-related 
ESA to any customer who has an income which exceeds the applicable 
amount. This dis-application is necessary to allow the customer whose 
award qualifies for conversion but whose income (including earnings), at 
the point of conversion, exceeds their ESA applicable amount but did not 
previously exceed their IS applicable amounts, to receive a transitional 
addition (see regulation 8), and thereby avoid suffering a drop in their 
benefit income; 

paragraph 11 modifies regulation 75 of the ESA Regulations to protect 
the position of those customers who have occupational pensions which 
are currently wholly disregarded for the purposes of their existing awards. 
Where a customer's award qualifies for conversion, then, for the purposes 
of determining their standard entitlement to contributory ESA (see 
regulation 8), these pensions will continue to be disregarded; and 

paragraph 12 modifies regulation 144 of the ESA Regulations to provide 
that any customer whose award qualifies for conversion is not required to 
serve any waiting days before ESA becomes payable 

Regulation 7 - provides that, in determining the conversion decision, the basic 
conditions of entitlement to ESA, as listed in section 1(3) of the Welfare Reform 
Act 2007 will apply. In particular, the customer has to have (or can be treated 
as having) limited capability for work. 

Regulation 8 - provides for the Steps to be followed, to arrive at the overall 
amount of ESA payable to a customer whose award qualifies for conversion. It 
makes provision for the award of a transitional addition to be paid on top of the 
customer's standard entitlement to ESA, where appropriate, to prevent any 
customer suffering a loss of benefit income at the point of conversion. 

Regulations 9-11 - provide for the basis of the calculation of the transitional 
addition. In each case, a comparison will be made between the applicable 
amounts payable under the existing award in the week before the effective date 
of the conversion decision, and those payable under ESA in the week that includes 
the effective date. The calculation of the ESA applicable amounts will include 
the relevant main phase component (regulations 10(4)(b) and 11(4)(c)). 

The calculations will take into account, where appropriate, any Adult or Child 
Dependency Increases payable on top of IB or SDA (regulation 10(5)). They 
will exclude any amounts previously payable within the IS award by way of 
allowances or premiums in respect of children (regulation 11(3)(c)) or housing 
costs (regulations 11(3)(b) and 11(4)(b)). Any shortfall between the two sets 
of figures will be met by way of a transitional addition. 



151 



Regulation 12 - provides for modifications to the normal basis upon which the 
transitional addition is calculated in cases where either (i) the calculation 
straddles uprating (paragraph (3)) or (ii) a change in the customer's 
circumstances results in a change in their applicable amounts during the week 
that includes the effective date (paragraph (4)). In either event, the calculation 
will be based on what the incapacity benefit applicable amounts would have 
been in the week that includes the effective date had conversion not taken 
place. This removes the risk of the customer going forward with an artificially 
deflated, or artificially inflated, transitional addition, on the basis of an event or 
change that had nothing to do with the conversion exercise. 

Regulation 13 - provides that no transitional addition will be payable where 
the standard award of ESA is nil and any transitional addition, as calculated, 
would be less than 10p. 

Regulation 14 - provides for the determination of the effective date of a 
conversion decision. Where benefit is paid fortnightly (paragraph (1)), the 
effective date will be the first day of the benefit week immediately following the 
period covered by the first full fortnightly payment after the date of issue of the 
decision (paragraph (1)),. Where benefit is paid other than fortnightly, the 
effective date will be the first day of the benefit week immediately following the 
end of the second complete benefit week after the date of issue of the decision 
(paragraph (2)). 

Regulation 15 - provides that awards that qualify for conversion will be 
converted to awards of ESA from the effective date of the conversion decision, 
and that existing awards will be terminated from the same date. 

Paragraph (3) provides for any sums being taken off the existing award (eg in 
respect of gas or electricity consumption and arrears) to be carried forward to 
the award of ESA, without interruption, to safeguard the customer's interests. 

Regulation 16 - provides that existing awards which do not qualify for 
conversion will be terminated from the effective date of the conversion decision. 

PART 3 -AFTER THE CONVERSION PHASE 

Regulation 17 - provides for the revision of the conversion decision or for its 
later supersession (paragraph (1)(a)). Paragraph (4) provides for the 
retrospective revision or supersession of the decision relating to the incapacity 
benefit award after that decision has ceased to exist ie at any time after the 
effective date of the conversion decision. This, in turn, will prompt the SoS to 
look again at the conversion decision and to revise it as necessary. As per the 
explanation relating to regulation 6, paragraph (3) provides for the application 
of the existing legislation with the modifications specified in Schedule 2 

In Schedule 2, in particular - 

paragraph 5 continues to dis-apply the condition in paragraph 6(1 )(a) of 
Schedule 1 to the Welfare Reform Act 2007, which prevents awards of 
income-related ESA to any customer who has an income which exceeds 



152 



the applicable amount. This dis-application is necessary to allow the 
customer whose award qualified for conversion but whose income 
(including earnings), at the point of conversion, exceeded their ESA 
applicable amount but did not previously exceed their IS applicable 
amounts, to continue to receive a transitional addition; 

paragraph 11 modifies the ESA Regulations by inserting a new Part 4A 
which provides for an award of ESA to be made to the customer at the 
equivalent of the assessment phase rate (ie without any component or 
any transitional addition) in the event of an appeal against a conversion 
decision that embodies a determination that the customer does not have 
limited capability for work; 

paragraph 13 modifies regulation 45 of the ESA Regulations (exempt 
work, more commonly referred to as "permitted work") to provide that any 
customer who, at the point of conversion to ESA, is undertaking exempt 
work of a category prescribed in regulation 17(4)(a) of the Social Security 
(Incapacity for Work) (General) Regulations 1 995 (being work that is done 
for less than 16 hours a week, and where the weekly earnings from that 
work do not exceed £93), can carry on undertaking such work once on 
ESA, for the balance of the 52 week permitted work period, as calculated; 

paragraphs 14 and 15 modify regulations 67 and 68 of the ESA 
Regulations, respectively, to provide for the inclusion of the transitional 
addition (where appropriate) within the calculation of the customer's 
applicable amounts; 

paragraph 1 6 provides for the continuing disregard, within the assessment 
of awards of contributory ESA, of occupational pensions which were 
previously wholly disregarded for the purposes of customer's incapacity 
benefit awards; 

paragraph 18 amends regulation 3 the Social Security (Claims and 
Payments) Regulations 1 987 (claims not required for entitlement to benefit 
in certain cases) to enable the SoS to make a conversion decision without 
first requiring a claim; and 

paragraph 20 amends Schedule 9 to the Social Security (Claims and 
Payments) Regulations 1 987 (deductions from benefit and direct payments 
to third parties) to provide for such deductions to be taken off converted 
awards of ESA 

Regulation 18 concerns the cases where, upon conversion, a customer is 
entitled to both contributory and income-related ESA, with the latter "topping 
up" the former. It provides that, where a change in circumstances operates to 
terminate the award of income-related ESA, the customer will be able to fall 
back on to the award of contributory ESA, including any transitional addition 
separately payable on top of that award (paragraph (2)). The amount of the 
transitional addition will be based on the amount that would, at that point, have 
been payable on top of contributory ESA had the customer been in receipt of 
contributory ESA throughout the period since conversion (paragraph (3)). 



153 



Regulations 19-21 outline the rules under which the transitional addition will 
be eroded. 

Regulation 19 provides that, in both contributory and income-related ESA 
cases, any transitional addition will be reduced by an amount equivalent to any 
increase in the applicable amount (eg as a result of uprating or the award of a 
component at a rate higher than the existing rate). 

Regulation 20 - provides that, where, at the point of conversion, a Child 
Dependency Increase (CDI) was in payment as part of the incapacity award, 
the value of any transitional addition will be reduced by an amount equivalent 
to the value of the CDI (or to nil, as appropriate) in payment at the point of 
conversion, where child benefit ceases to be payable in respect of the child in 
respect of whom the CDI was formerly in payment (paragraph (3)). 

Regulation 21 - provides that, where, at the point of conversion, an Adult 
Dependency Increase (ADI) was in payment as part of the incapacity award, 
the value of any transitional addition will be reduced by an amount equivalent 
to the value of the ADI (or to nil, as appropriate) in payment at the point of 
conversion in the circumstances where the partner in respect of whom the ADI 
was formerly in payment either dies; or separates from the claimant; or is no 
longer responsible for a dependent child ie entitlement to child benefit ceases; 
or becomes entitled to a Social Security benefit in their own right at a rate 
equivalent to, or more than, the amount of the ADI in force at the point of 
conversion (paragraph(3)). 

Regulation 22 - provides that a transitional addition will be terminated if the 
erosion rules outlined in regulations 19-21 have reduced it to nil (paragraph (1) 
(a)), or where there is no longer any entitlement to ESA (paragraph (1)(b)), or 
on 5 April 2020 (paragraph (1)(c)). 

Paragraphs (4) and (5) provide safeguards for when there is no longer any 
entitlement to ESA. Paragraph (4) provides that where a repeat claim is made 
within the normal linking periods specified in regulation 145 of the ESA 
Regulations (12 weeks in a normal case; 104 weeks where the customer was 
a welfare to work beneficiary), the customer will become entitled to any 
transitional addition in force at the point the previous award terminated. 

Paragraph (5) provides that, where the customer has ceased to receive 
income-related ESA because their partner has started remunerative work, if 
they successfully make a repeat claim within 12 weeks, they will become 
entitled to any transitional addition in force at the point the previous award 
terminated. In both cases, the transitional addition will be based on the amount 
that would, at that point, have been payable on top of ESA had the customer 
remained entitled to the addition continuously (paragraph (6)). 



154 



PART 4 - MISCELLANEOUS 

Regulation 23 establishes a clean break from the past. It provides that the 
provisions of the existing incapacity benefit legislation (as listed) will cease to 
apply to the customer at the effective date of their conversion decision. 

Regulation 24 amends the ESA (Transitional Provisions) Regulations 2008, by 
revoking the pre-existing saving provisions that enable a customer, even after 
the introduction of ESA on 27 October 2008, to make a repeat (linked) claim for 
an incapacity benefit, rather than a new claim for ESA. As per regulation 1(3), 
the revocation comes into force on 31 January 2011. 

The provision under which a customer can make a claim for an income- 
related top-up to an existing IB/SDA award (ie before their case is converted) 
has not been revoked. Such a claim will continue to be accepted as an IS claim, 
until such time as a conversion decision is made in their case. 

Regulation 25 sits alongside regulation 24, and comes into effect on the same 
date. It amends the ESA Regulations to ensure that a customer who, on or after 
31 January 2011, makes a claim to ESA within 12 weeks of a previous award 
of an incapacity benefit - (and which, therefore, would have linked back to that 
previous award had it not been for regulation 24) - does not have to serve any 
waiting days in respect of the new claim. 

Regulation 26 relates to the amendments listed in Schedule 4. These correct 
a minor error in the Claims and Payments Regulations, rectifying the cross- 
references, and provide for a consequential amendment to the ESA (Transitional 
Provisions) Regulations 2008 



155 



APPENDIX 5 

EXPLANATION OF THE HOUSING BENEFIT AND COUNCIL TAX 
BENEFIT (EMPLOYMENT AND SUPPORT ALLOWANCE) AMENDMENT 
REGULATIONS 2010 

Please note: the HB/CTB amendments are presented as a separate draft 
Statutory Instrument for the purposes of consultation. We intend to combine 
the HB/CTB amendments with the ESA provisions for the final package. 

Regulation 1 provides the citation and commencement date of 1 October 
2010. As the regulations will be a part of a set making amendments to ESA 
itself, this provision will not be included specifically for HB/CTB. All the 
amendments will come into force at the same time, 

Regulation 2(1) amends the Housing Benefit Regulations 2006 (the provisions do 
not apply to customers who have reached the qualifying age for Pension Credit). 

Regulation 2(2) and (3) respectively amend the applicable amounts for single 
customers and couples and applicable amounts for polygamous marriages 
provisions so that a transitional addition may form a part of the applicable amount. 

Regulation 2(4)(a) inserts a new paragraph 21 A into HB Schedule 3 (applicable 
amounts) so that a customer whose claim has been converted to ESA may 
have either a work-related activity component or a support component added 
to their applicable amount. A separate paragraph has been added for converted 
claims because the existing provision (paragraph 21 ) requires that the customer 
must have claimed ESA. Where a claim is converted the customer will not have 
done that. 

Regulation 2(4)(b) inserts new paragraphs 27(1 )-(4), 28(1 )-(3) and 29(1 )-(4) 
into Schedule 3 (applicable amounts) to provide for a transitional addition in 
certain cases. 

Transitional addition entitlement 

The new paragraph 27(1) provides that a customer is not entitled to a 
transitional addition: 

• if their IB or SDA award has been converted to ESA(IR). There is no 
need for local authority to calculate a transitional addition as entitlement 
to full eligible (passported) HB will be retained; 

• if the transitional addition would be nil. This provision would prevent 
local authorities from needing to award a transitional addition at a nil 
amount and recalculating that award at the next change of circumstances. 

Customers who will be entitled to a transitional addition in HB are: 

• those whose award of IB or SDA is converted to ESA(C) or are a 
converted credits only case; and 



156 



• those who are awaiting an appeal hearing having appealed against a 
decision that they would not be entitled to converted ESA because they 
do not have limited capability for work. Such customers will be awarded 
assessment phase rate ESA but no transitional addition to increase their 
ESA to their IB level, until the appeal is decided. 

Ending the HB transitional addition 

The new paragraph 27(2) contains the provisions for when a HB transitional 
addition will end. This will be whichever of the following occurs first: 

the transitional addition is reduced to nil (the provisions for how this will 
happen are set out in new paragraph 29 of Schedule 3); 

the customer's HB ends; 

the ESA converted award ends; 

the ESA awarded on appeal against a decision that the customer does 
not have limited capability for work ends; or, 

the 5 April 2020, - this mirrors the ESA transitional addition provision. 

Linking rules 

The new paragraphs 27(3) and (4) contain the linking rule provisions for when 
paragraph 27(2) will cease to apply. 

Where HB ends for any reason and irrespective of whether the ESA ends, the 
HB transitional addition will be reinstated where a customer becomes re-entitled 
to HB, based upon ESA. However the break in HB entitlement must not last for 
more than 12 weeks. On reinstatement the HB transitional addition will be 
subject to any changes that would have eroded it had the customer been 
continuously on ESA based HB. 

When ESA ends and HB continues the transitional addition will be removed. 
Where a customer becomes re-entitled to ESA in a period not exceeding 12 
weeks the HB transitional addition will be reinstated, subject to any changes 
that would have eroded it had the customer remained on ESA. 

Where the ESA ends and the customer becomes re-entitled to ESA within 104 
weeks and during that period the customer was a welfare to work beneficiary, 
(see below) the HB transitional addition can be reinstated in the same manner 
as the 12 week linking rule explained in the previous two paragraphs. 

Welfare to work beneficiaries are those to whom regulation 145(2) of the 
Employment and Support Allowance Regulations 2008 apply. In summary they 
are customers who: 

• have had limited capability for work for more than 1 3 weeks and 



157 



• have left ESA because they have started remunerative work or a training 
course for which a training allowance is received, within a month of 
ESA ceasing. 

Once the customer has limited capability for work once again they will be a 
welfare to work beneficiary. 

Calculating the transitional addition 

The new paragraph 28 contains the provision for calculating the transitional 
addition. The calculation will be made by comparing the HB applicable amount 
on the day the relevant incapacity benefit award is converted to ESA, on the 
basis that the conversion had not happened, with the applicable amount on that 
same day, the conversion having happened. 

Where the first amount is higher than the second, the transitional allowance 
would make up the shortfall. Comparing applicable amounts that would apply 
from the same day would prevent changes not related to the conversion inflating 
or deflating the transitional addition. 

Eroding the transitional addition 

The new paragraph 29 contains the provisions for eroding the transitional 
addition. The calculation of the amount of the erosion is to be achieved by 
comparing the applicable amount, excluding the transitional addition, appropriate 
on the day before the change of circumstance (which includes an annual 
uprating) is effective, with the applicable amount, excluding the transitional 
addition, on the day the change is effective. If the second amount is greater 
than the first, the transitional addition would be eroded by the amount that the 
second amount exceeds the first. 

Regulation 3 amends the Council Tax Benefit Regulations 2006 in the same 
way as the amendments to HB described above. 

Regulation 4(1 ) amends the Housing Benefit and Council Tax Benefit (Decisions 
and Appeals) Regulations 2001 to allow local authorities to adjust the HB/CTB 
award to reflect ESA structure. 

Regulation 4(2)(a) amends regulation 7(2)(i) which contains the provisions for 
when HB/CTB awards can be superseded on the award of or increase to a social 
security benefit. This enables the local authority to amend the HB/CTB award from 
the date that the change becomes effective, as set out in the new regulations 
7(2)(p) or (q) and the new provisions inserted by draft regulation 4(3). 

Regulation 4(2)(b) inserts the new regulations 7(2)(p) and (q). 

7(2)(p) allows the local authority to award a different component in HB/CTB to 
a customer who has had their incapacity benefit converted to ESA and, 
subsequent to that conversion, the ESA component changes. 



158 



7(2)(q) allows the local authority to change the calculation of HB/CTB to reflect 
the ESA structure and award a transitional addition where appropriate when: 

• a HB/CTB customer's incapacity benefit is converted to ESA or 

• ESA is awarded pending the outcome of a customer's appeal against a 
decision that they do not have limited capability for work. 

Regulation 4(3) inserts the provisions for determining the effective date of the 
decision made by using regulation 7(2)(p) or 7(2)(q). It provides that where the 
HB/CTB is amended using regulation 7(2)(p) (a different component is awarded 
subsequent to conversion) the effective date would be that day if it were a 
Monday or if not, the following Monday. This would be in line with the effective 
date of a change of component for existing HB/CTB awards assessed in line 
with ESA structure. 

It also provides that where HB/CTB is amended using 7(2)(q) (a newly converted 
incapacity benefit claim or ESA awarded pending the outcome of an appeal) 
the effective date will be either: 

• the date the decision to convert the claim to ESA or award ESA pending 
appeal takes effect or 

• where the decision to convert the claim to ESA or to award ESA pending 
appeal takes effect during the first two weeks of April (the annual uprating 
period) the effective date will be the 1st of April for CTB and where rent 
is payable other than on a weekly basis. Where rent is payable on a 
weekly basis the effective date will be the first Monday in April. This will 
be in line with existing provisions for uprating and therefore, will allow 
local authorities to combine conversion with the annual uprating process. 



159 



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